DEBATERS'  HANDBOOK  SERIES 


AMERICAN  MERCHANT  MARINE 


DEBATERS' 
HANDBOOK  SERIES 

American  Merchant  Marine 

Debaters'  Manual  (2nd  ed.  enl.) 

Capital  Punishment    (2d  ed.  rev.) 

Commission  Plan  of  Municipal  Govern- 
ment (3d  ed.  rev.  and  enl.) 

Central  Bank  of  the  United  States 

Child  Labor    (2d  ed.  rev.  and  enl.) 

Compulsory  Arbitration  of  Industrial  Dis- 
putes (2d  ed.  rev.  and  enl.) 

Compulsory  Insurance 

Conservation  of  Natural  Resources 

Direct  Primaries    (3d  ed.  rev.  and  enl.) 

Election  of  United  States  Senators(2d  ed.) 

Employment  of  Women 

Federal  Control  of  Interstate  Corporations 
(2d  ed.  rev.  and  enl.) 

Free  Trade  vs.  Protection 

Government  Ownership  of  Railroads  (2d 
ed.  rev.  and  enl.) 

Government  Ownership  of  Telegraph  and 
Telephone 

Immigration 

Income  Tax    (2d  ed.  rev.  and  enl. ) 

Initiative  and  Referendum  (3d  ed.  rev. 
and  enl.) 

Minimum  Wage 

Monroe  Doctrine     (2d  ed.  rev.  and  enl.) 

Mothers'  Pensions 

Municipal  Ownership     (2d  ed.) 

National  Defense  Vol.  I 

Open  versus  Closed  Shop     ( 2d  ed.) 

Parcels  Post    (2d  ed.  rev.  and  enl.) 

Prohibition 

Recall    (2d  ed.  rev.  and  enl.) 

Reciprocity 

Single  Tax 

Trade  Unions  (2d  ed.  enl.) 

Unemployment 

Woman  Suffrage    (3d  ed.  rev.) 

World  Peace    (2d  ed.  rev.  and  enl.) 

HANDBOOK  SERIES 

Agricultural  Credit 
European  War.    Two  volumes 
Short  Ballot 
Socialism 

Other  titles  in  preparation 

Each  volume,  one  dollar  net 


Debaters'     Handbook     Series 


SELECTED  ARTICLES 


ON  THE 


AMERICAN  MERCHANT  MARINE 


COMPILED  BY 
EDITH  M.  PHELPS 


THE    H.  W.    WILSON    COMPANY 
WHITE  PLAINS.  N.  Y.  and  NEW  YORK  CITY 

1916 


• 


Published  October.  1916 


EXPLANATORY  NOTE 


Ever  since  President  Wilson's  message  to  Congress  of  De- 
cember 7,  1914,  asking  for  legislation  for  the  encouragement  of 
American  shipping,  a  bill  has  been  before  Congress,  in  some 
form  or  other,  providing  for  government  participation,  in  some 
measure,  in  the  ownership  and  control  of  an  American  merchant 
marine.  While  no  bill  has  been  passed  to  this  date,  the  debates 
have  been  the  means  of  arousing  the  public  to  the  present  condi- 
tion of  American  shipping,  and  of  reviving  discussion  of  this 
subject  to  a  considerable  degree.  In  response  to  the  resulting 
demand  for  material  on  this  question,  this  volume  has  been  com- 
piled for  the  use  of  students,  debaters  and  others  wishing  to 
make  a  study  of  the  question.  It  attempts  to  set  forth  the  facts 
in  regard  to  the  history  of  our  merchant  marine  and  its  present 
status  with  regard  to  the  shipping  of  other  nations.  The  argu- 
ments for  and  against  government  ownership  and  control  are 
also  presented.  In  keeping  with  the  general  plan  of  the  series, 
this  volume  contains  affirmative  and  negative  briefs,  a  selected 
bibliography,  and  reprints  of  much  valuable  material  on  the 
question. 

E.  M.  P HELPS. 
July  29,  1916. 


342310 


CONTENTS 

BRIEFS 

Introduction xi 

Affirmative    xii 

Negative    xiv 

BIBLIOGRAPHY 

Bibliographies    xvii 

Books,  Pamphlets  and  Documents xviii 

Periodicals 

General    References xxi 

Affirmative    References xxvi 

Negative    References xxvii 

INTRODUCTION    i 

GENERAL  DISCUSSION 

The  American  Merchant  Marine:  What  It  Has  Been,  What 

It  Is,  What  It  Ought  to  Be 

Report,  Boston  Chamber  of  Commerce      7 

Summary  of  Pertinent  Data . . . 

Referendum  No.  9.  U.  S.  Chamber  of  Commerce    29 

What  the  War  Has  Done  to  Shipping Independent    41 

Forms  of  Government  Aid  to  Shipping 

Special  Agents  Series  No.   119.     Bureau  of  Foreign 

and  Domestic  Commerce.  U.  S.  Department  of  Commerce    42 

Fortunes  of  the  Shipping  Industry Nation    48 

The  Use  and   Benefits   of   an  American   Merchant   Marine 

Bulletin  No.  2.  Directories  of  the  Port  of  Boston     52 

Huebner,   Grover  G.     Probable  Effects  of  the  War  on  the 

Foreign  Trade  of  the  United  States 

Proceedings.     Academy  of  Political  Science  (N.  Y.)     59 

Government  Ownership :   Private  Ownership 

National  Foreign  Trade  Council    69 


viii  CONTENTS 

AFFIRMATIVE  DISCUSSION 

Fletcher,  Duncan  U.    What  Congress  Has  Done  to  Build  up 

an  American  Mercantile  Marine 

Proceedings.  Academy  of  Political  Science  (N.  Y.)     77 

Garner,  James  W.    Arguments  for  Government  Aid 

North  American  Review    97 

Redfield,  William  C.   The  Imperative  Need  for  Ships  Owned 

by  Americans Engineering  Magazine    98 

Owen,   Robert  L.    What  Congress   Should  Do  to   Develop 

an  American  Mercantile  Marine 

Proceedings.   Academy  of  Political  Science  (N.  Y.)   102 

Hardy,  Rufus.     The  Restoration  of  Our  Merchant  Marine..  « 

National   Economic  League  Quarterly  106 

Alexander,  Joshua  W.     Government  Ship  Purchase  Bill 

Scientific   American  115 

Stoddard,  W.  L.    The  Shipping  Bill ...  Railway  Age  Gazette  116 

McAdoo,  William  G.     Ship  Purchase  Bill 118 

Adequate  Shipping  Facilities  for  Foreign  Commerce 

63d  Congress,  3d  Session.  Senate  Report.  No.  841  128 

Government  Ownership  and  Operation  of  Merchant  Vessels 

in  the  Foreign  Trade  of  the  United  States 

63d  Congress,  2d  Session.  House  Report.  No.  1149  138 

Sweet,  Edwin  F.     The  Government  and  the  Shipping  Prob- 
lem.   Official  Report.    Third  National  Foreign  Trade  Con- 

vention  143 

American  Merchant   Marine 

63d  Congress,  2d  Session.  Senate  Doc.  No.  601  146 

NEGATIVE  DISCUSSION 

Promotion  of  the  Foreign  Commerce  of  the  United  States: 

Views  of  the  Minority 

.  .63d  Congress,  3d  Session.  Senate  Report.  No.  841.  Part  2  151 

Why  Our  Shipping  Has  Declined Unpopular  Review  162 

Burton,  Theodore  E.  The  Opposition  and  the  Shipping  Bill  166 
Dollar,  Robert.  Development  of  a  National  Shipping  Policy  176 
Government  Ownership  Policy  Deters  Private  Enterprise.. 

Report.   National  Foreign  Trade  Council  182 

Will  the  Pending  Bill  Encourage  American  Shipping? 

Statement.    National  Foreign  Trade  Council  186 


CONTENTS  ix 

Marvin,   Winthrop   L.     The   Restoration  of  Our   Merchant 

Marine National  Economic  League  Quarterly  197 

Thomas,  John  H.  The  American  Merchant  Marine.. Century  202 
Report  of  the  Special  Committee  on  the  Merchant  Marine 

U.  S.  Chamber  of  Commerce  205 

Referendum  No.  9 — Merchant  Marine Nation's  Business  207 

Hadley,  Lindley  H.  Shipping  Bill  Will  Add  Nothing  to  Our 

Tonnage Congressional  Record  209 

Weeks,  John  W..  The  American  Merchant  Marine 

Proceedings.  Academy  of  Political  Science.  (N.  Y.)  211 

Ring,  Welding.  Development  of  the  American  Merchant 

Marine 

Proceedings.    Academy  of  Political  Science  (N.  Y.)  214 


BRIEF 

Resolved :   That  the  United  States  should  have  a  government- 
owned  merchant  marine. 

INTRODUCTION 

I.     The  history  of  our  American  merchant  marine  shows  that 

while  our  coastwise  shipping  trade  has  prospered,  the 

foreign  carrying  trade  has  not  developed  in  similar 

proportion  to  the  growth  and  prosperity  of  the  nation. 

A.     The  proportion  of  our  imports  and  exports  carried  in 

American  ships  in  1810  was  91.5  per  cent;  in  1914 

it  was  8.3  per  cent. 

II.     Various  reasons  given  for  this  decline  in  American  ship- 
ping are: 

A.  The  development  of  the  United  States  as  an  agricul- 

tural rather  than  as  a  maritime  nation. 

B.  American  shipping  has  not   received    the    necessary 

government  aid  to  enable  it  to  compete  with  the 
government-aided  ships  of  foreign  nations. 

C.  Costs  of  production  and  operation  are  much  higher 

for  American  than  for  foreign  ship-owners. 

D.  Such  legislation  as  has   been   enacted  has  hindered 

rather  than  helped. 

III.    Various  remedies  are  proposed  for  the  relief  of  American 
shipping. 

A.  Discriminating  duties. 

B.  Subsidies. 

C.  Increase  in  amounts  granted  under   the    Ocean-Mail 

Act  of  1891. 

D.  Government  ownership  of  our  merchant  marine. 

IV.    The  issues  seem  to  be: 

A.    Is  a  larger  merchant  marine  essential  to  our  welfare 
as  a  nation? 


xii  BRIEF 

B.    Is    government    ownership    and    control    the     best 
method  whereby  to  acquire  a  larger  marine? 

ARGUMENT  FOR  THE  AFFIRMATIVE 

I.    An  American  merchant  marine  has  long  been  needed  for 
our  foreign  trade. 

A.  To   develop   our   foreign   commerce  especially  in  the 

establishment   of  new   routes  and  of  connections 
with  new  countries. 

B.  To  provide  our  navy  with  the  necessary  colliers  and 

auxiliary  vessels. 

C.  To  improve  our  foreign  mail  service. 

D.  To  give  American  shippers  the  advantage  of  freight 

rates. 

II.     The  present  condition  of  our  foreign  shipping  is  serious 
and  calls  for  prompt  relief. 

A.  Freight  rates  are  exorbitant. 

B.  The  number  of  ships  available  for  American  trade 

has  been  greatly  reduced. 

1.  Many  ships  of  the  belligerent  nations  have  been 

destroyed  or  requisitioned  for  government  pur- 
poses. 

2.  Neutral  ships  give  precedence  to  the  shippers  of 

their  own  countries. 

*^f  i  tltt«t  ~*-«J&uA    *  &**-&  A>Jl»"*--*-*-. 

III.    A  government-owned  merchant  marine  would  best  meet 

present  needs. 

A.    Other  methods  have  not  been  successful,  or  are  ob- 
jectionable. 

1.  Private  capital  has  not  engaged  in  foreign  ship- 

ping under  American   registry    to    any    great 
extent. 

o.  Due  to  our  present  navigation  laws,  the  cost 
of  purchasing  and  operation  is  greater  un- 
der American  than  under  foreign  registry. 
b.  Private  capital  cannot  compete  successfully 
with  the  large  shipping  corporations  now  in 
existence. 

2.  The  "free  ships"  policy    has    not    succeeded    in 

bringing  many  ships  under  American  registry. 


BRIEF  xiii 

3.  Discriminating    duties    are    contrary    to    existing 

treaties. 

4.  Mail  subventions  have  not  operated  to  build  up 

our  merchant  marine. 

5.  Subsidies  are  objectionable. 

a.  Such  payments   of   this  kind    as    have    been 

granted  have  not  succeeded  in  building  up 
a  merchant  marine. 

b.  They  result  in  favoritism  and  discrimination. 

c.  They  lead  to  extravagance  and  corruption. 

IV.     Government  ownership  of  a  merchant  marine  is  wise  from 
an  economic  standpoint. 

A.  It  will  reduce  freights  and  provide  vessels  for  Ameri- 

can shippers. 

B.  By  thus  giving  the  government  additional  shipping  to 

fall  back  upon  in  case  of  war,  the  number  of  auxil- 
iary vessels,  needed  for  naval  use,  can  be  kept  at 
a  minimum. 

C.  The  experience  of  our  government  with  similar  un- 

dertakings shows  that  the  service  can  be  rendered 
both  economically  and  efficiently. 

D.  The  argument  that  it  will  check  private  enterprise 

from  going  into  the  foreign  shipping  does  not 
apply. 

i.     Private  capital  has  done  little  in  that  direction  so 
far. 

V.    Government  ownership  of  a  merchant  marine  is  a  legiti- 
mate function  of  government. 

A.  The  government  already  owns  and  operates  the  Pan- 

ama Railroad  Steamship  Company. 

B.  There  are  problems  in  mercantile  shipping  that  pri- 

vate ownership  has  never  solved.  It  is  time  for 
the  government  to  step  in. 

C.  The  cry  of  paternalism  is  unfounded. 

VI.    A  government  monopoly  will  not  be  created. 

A.  Only  a  limited  amount  of  shipping  is  to  be  owned  by 

the  government. 

B.  It  is  proposed  that  the  government  sell  its  ships  as 

rapidly  as  possible. 


xiv  BRIEF 

VII.     Our  neutrality  will  not  be  endangered. 

A.  Great  Britain  and  the  United  States  have  long  upheld 
the  right  of  a  neutral  nation  to  purchase  the  mer- 
chant  vessels  of  a  nation  at  war. 


VIII.     Ample  precedent  exists  for  government  ownership  of  a 

merchant  marine. 

A.     Business  men  have  already  asked  the  government  to 
take  over  the  business  of  war  risk  insurance. 

ARGUMENT  FOR  THE  NEGATIVE 

I.  While  it  is  granted  that  a  larger  merchant  marine  would 
be  a  great  advantage  to  us,  the  immediate  needs  are 
not  as  pressing  as  have  been  reported. 

A.  The  situation  with  regard  to  freight  rates  is  not  as 

serious  as  has  been  stated. 

1.  The  amounts  paid  in  freight  rates  to  foreign  ship- 

pers have  been  greatly  overestimated. 

2.  Higher    freight    rates    are   more    than    offset    by 

higher  prices  received. 

B.  The  scarcity  of  ships  has  been  overestimated. 

1.  The  increase  of  our  exports  is  more  than  offset 

by  the  falling  off  in   the  trade  of  belligerent 
nations. 

2.  The  present  shortage  is  due  more  to  the  risks  of 

war,  the  lack  of  port    and    terminal    facilities 
and  of  marine  insurance  and  to  the  shortage  of 
labor  than  to  the  lack  of  ships. 
a.    This  shortage  can  be  relieved  to  a  great  ex- 
tent by  providing  adequate  war  risk  insur- 
ance, and  by  making  loans  to  private  ship- 
pers at  reasonable  rates. 

II.    Government  ownership  of  a  merchant  marine  is  wrong  in 
principle. 

A.  It  is  class  legislation  and  contrary  to  our  American 

ideals. 

B.  It  destroys  individual  effort. 

C.  Government  ownership  should  be  restricted  to  such 

businesses  as  are  naturally  monopolistic. 


BRIEF  xv 

III.  Government  ownership  would  defeat  the  very  object  it  is 

supposed  to  accomplish. 

A.  The  consequent  reduction  of  rates  would  not  only 
keep  American  capital  from  investing  but  would 
also  drive  present  American  shipping  from  the 
foreign  trade. 

IV.  No  immediate  advantage  could  be  gained  by  government 

ownership. 

A.  Mere  transfer  of  present  shipping  to  the  government 

would  not  increase  the  amount  of  shipping  avail- 
able. 

B.  Additional  ships  cannot  be  secured  for  present  needs. 

1.  Only  the  ships  of  the  belligerents  are  for  sale  and 

to  buy  these  would  endanger  our  neutrality. 

2.  Shipyards  are  now  working  to  full  capacity  with 

orders  ahead  for  some  time  to  come. 

3.  Enough  ships  cannot  be  bought  by  the  funds  pro- 

vided under  the  present  bill  to  materially  alter 
the  situation. 

C.  No   provision   is   made   for  tramp   shipping  through 

which  a  large  part  of  foreign  commerce  must  be 
done  to  make  the  foreign  shipping  trade  profitable. 

D.  A  government-owned  merchant  marine  would  not  be 

sufficient  to  develop  trade  with  new  countries, 
i.     Capital  must  often  be  advanced,  as  well  as  ship- 
ping facilities,  to  develop  new  resources. 

V.     Government  ownership  would  be  wasteful. 

A.  Government  management  is  usually  more  expensive 

than  private  management. 

B.  Ships  are  selling  at  abnormally  high  prices  at  present. 

C.  After  the  war  foreign  shipping  will  again  compete. 

VI.     Government  ownership  would  be  undesirable   for  other 
reasons. 

A.  It  would  mean  the  purchase  of  ports,  terminals,  etc., 

which  would  lead  to  political  favoritism. 

B.  It  would  mean  government  trading  to  secure  return 

cargoes. 

C.  The  shipping  board  would  have  too  much  power. 

i.     The   rate-regulating  power  should  not  also  own 
part  of  the  shipping. 


xvi  BRIEF 

D.  Government  ownership  is  not  needed. 

1.  It  cannot  remedy  the  present  situation. 

2.  Private  owned  American    shipping    will    increase 

after  the  war. 

E.  Other  remedies  would  be  preferable. 

1.  Our  present  navigation  laws  could  be  amended  so 

as  to  put  American  shippers  on  equal  terms 
with  those  from  other  countries. 

2.  Discriminating    duties    and    subsidies    were    both 

successful  in  building  up  our  merchant  marine 
to  the  prosperity  attained  in  its  early  history. 


BIBLIOGRAPHY 

An  asterisk  (*)  preceding  a  reference  indicates  that  the  entire  article 
or  a  part  of  it  has  been  reprinted  in  this  volume.  Many  of  the  magazine 
articles  and  pamphlets  listed  here,  as  well  as  similar  material  that  may  be 
published  after  this  volume  is  issued,  may  be  secured  at  reasonable  rates 
from  the  Wilson  Package  Library  operated  by  The  H.  W.  Wilson  Company. 

BIBLIOGRAPHIES 

Clifford,  Caroline  A.  Selected  Articles  on  Ship  Subsidy 
(Abridged  Debaters'  Handbook  Series),  p.  6-13.  25c.  H.  W. 
Wilson  Co.  1913. 

Briefs  and  reprints  of  selected  articles  are  also  included. 

Independent.  81:210.  F.  8,  '15.  Both  Sides:  Shall  We  Have  a 
Government-Owned  Merchant  Marine? 

Iowa  University.  Constructive  and  Rebuttal  Speeches  of  the 
Representatives  of  the  State  University  of  Iowa  in  the  Inter- 
Collegiate  Debates,  1911-1912.  "Resolved,  That  the  United 
States  Should  Adopt  a  Policy  of  Shipping  Subsidies."  p.  36-9. 
$i.  H.  W.  Wilson  Co.  1912. 

Briefs   are    also   included. 

Library  of   Congress.     A   List   of   Books    (with   References   to 

Periodicals)  on  Mercantile  Marine  Subsidies.  3d  ed.  with  ad- 

ditions. 140?.  2oc.  1906. 
Library  of  Congress.     Additional  References  Relating  to  Mer- 

cantile Marine  Subsidies,   p.  141-64.  loc.  1911. 
Library  of  Congress.     List  of  Recent  References  on  Mercantile 

Marine   Subsidies   and  Government   Operation  of   Steamship 

Lines  (Ship-purchase).  9p.  1915. 

Typewritten.     Supplementary    to    the    printed    lists    of    1906    and    1911. 

Superintendent  of  Documents,  Washington,  D.  C.  Transporta- 
tion :  List  of  United  States  Public  Documents  Relating  to 
Railroads,  'Merchant  Marine,  Postal  Service,  etc.  4ip.  April, 


Consult  also  general  reference  tools  found  in  the  public  or  reference 
library,  such  as  the  United  States  Catalog  and  Cumulative  Book  Index, 
a  record  of  books  in  print  to  January  i,  1912,  and  those  published  since; 
the  Readers'  Guide  to  Periodical  Literature,  igoo-date,  the  Readers'  Guide 
Supplement,  igia-date,  the  Industrial  Arts  Index,  igia-date,  Magazine 
Subject-Index,  etc.,  for  references  to  articles  in  periodicals. 


xviii  BIBLIOGRAPHY 

BOOKS,  PAMPHLETS  AND  DOCUMENTS 

Academy  of  Political  Science  (N.  Y.).  American  Mercantile 
Marine.  $2;  pa.  $1.50.  Acad.  of  Pol.  Sci.  1915. 

Proceedings  of  the  Academy,   Vol.  VI,  No.   i,  published  October,   1915. 
American  Academy  of  Political    and    Social    Science.     Govern- 
ment Regulation  of  Water  Transportation.  $1.50.  Phila.  1914. 
This  was  also  issued  as  the  Annals  for  September,   1912. 
American  Steamship  Association.     Comparison :   The  American 
Ship;  the  Foreign   Ship.     8p.   17  Battery  Place,   New  York 
City. 

Gives  figures  to  show  "the  legal  and  artificial  difficulties  under  which 
the  American  ship  suffers  in  its  effort  to  engage  in  over-seas  or  inter- 
national trade." 

Analysis  of  the  Present  Foreign   Trade  of  the  United  States. 

I9p.  pa.  Directors  of  the  Port  of  Boston.  1916. 
Bates,   William   W.     American   Marine:    Shipping   Question   in 

History  and  Politics.    $4.00.  Houghton.  1913. 
Bates,  William  W.     American  Navigation:  Political  History  of 
Its  Rise  and  Ruin  and  the  Proper  Means  for  Its  Encourage- 
ment.   $3.50.  Houghton.  1902. 
Blue  Book  of  American  Shipping.    $5.00.  Penton  Pub.  Co. 

Published  annually.  Devoted  to  statistics  of  shipping  and  ship  build- 
ing in  America. 

*Boston  Chamber  of  Commerce.  Committee  on  Merchant  Ma- 
rine. American  Merchant  Marine,  What  It  Has  Been,  What 
It  Is,  What  It  Ought  to  Be.  Chamber  of  Commerce.  23?. 
Boston.  1916. 

Brown,  Harry  G.  Transportation  Rates  and  Their  Regulation. 
Chap.  XII.  The  Macmillan  Co.,  New  York.  1916. 

*Chamber  of  Commerce  of  the  United  States.  Referendum  No. 
9:  On  the  Report  of  the  Special  Committee  of  the  Chamber 
on  the  Up-Building  of  the  Merchant  Marine.  53p.  pa.  Wash- 
ington, D.  C.  1915. 

*Dollar,  Robert.  Development  of  a  National  Shipping  Policy. 
i6p.  pa.  National  Foreign  Trade  Council,  64  Stone  St.,  New 
York  City. 

Presented   to   the   Third   National   Foreign    Trade  Convention,   January 
27-29,    1916.     See   also   the  Official    Report   of   the    Convention,   p.    226-38. 
Dunmore,  W.  T.    Ship  Subsidies.    Houghton.  1907. 
Fowler,  Charles  N.     National    Issues    of    1916.    Chap.    V.     An 

American  Merchant  Marine.    $1.50.  Harper.  1916. 


BIBLIOGRAPHY  xix 

Hough,  B.  Olney.  Ocean  Traffic  and  Trade.  La  Salle  Exten- 
sion University.  Chicago.  1916. 

Johnson,  Emory  R.  Elements  of  Transportation,  p.  304-17.  $1.50. 
Appleton.  1909. 

Lloyd's  Register  of  Shipping.  Published  annually.  17  Battery 
Place,  New  York  City. 

McSweeney,  Edward  F.  Problems  of  Port  Development.  29p. 
pa.  Directors  of  the  Port  of  Boston.  1915. 

Marvin,  Winthrop  L.  American  Merchant  Marine:  Its  History 
and  Romance  from  1620  to  1902.  Scribner's.  1902. 

Meeker,  Royal.  History  of  Shipping  Subsidies.  Columbia  Uni- 
versity. 1905. 

Meloney,  William  B.  Heritage  of  Tyre.  SOG.  Macmillan.  New 
York.  1915. 

Merchant  Marine  Commission.  Report,  together  with  the  Testi- 
mony Taken  at  the  Hearings.  3v.  Govt.  Ptg.  Office,  Wash. 

1905. 
National  Foreign  Trade  Convention,    Second.    Official    Report. 

$1.50.  Headquarters,  64  Stone  St.,  New  York  City.  1915- 
*National   Foreign   Trade   Convention,    Third.     Official   Report. 

1916.    Headquarters,    India    House,    Hanover    Square,    New 

York  City. 
*National  Foreign  Trade  Council.    Ocean  Shipping.  2d  ed.  I79p. 

pa.  25c.  64  Stone  St.,  New  York  City.  May,  1916. 

Extremely    valuable  for  the   many   facts  and    figures   given. 

*National  Foreign  Trade  Council.  Report  on  the  Merchant 
Marine,  Submitted  at  the  Second  Annual  Meeting  of  the 
Council,  September  23,  1915.  isp.  pa.  64  Stone  St.,  New 
York  City. 

*National  Foreign  Trade  Council.  Statement  to  the  Merchant 
Marine  Committee  of  the  House  of  Representatives  on  the 
Administration  Shipping  Bill  H.  R.  10,500  in  the  Form  In- 
troduced January  31,  1916.  2Op.  pa.  India  House,  Hanover 
Square,  New  York  City.  May,  1916. 

Paine,  Ralph  D.  Ships  and  Sailors  of  Old  Salem.  $3.50.  Mc- 
Clurg.  1909. 

Also  published  in  Outing,  Ja.-Je.,  Ag.   'o8-F.   '09,  Ap.   '09. 

Renninger,  Warren  D.  Government  Policy  in  Aid  of  American 
Shipbuilding :  Historical  Study  of  the  Legislation  Affecting 
Shipbuilding  from  Earliest  Colonial  Times  to  the  Present. 
Phila.  1911. 


xx  BIBLIOGRAPHY 

Rosenthal,  Benjamin  J.  Need  of  the  Hour:  an  American  Mer- 
chant Marine.  Priv.  ptd.  Chicago.  1915. 

*Ship  Purchase  Bill :  Opposite  Views  Expressed  by  William  G. 
McAdoo  and  Theodore  E.  Burton,  at  the  Third  Annual  Meet- 
ing of  the  Chamber  of  Commerce  of  the  United  States.  39?. 
Washington,  D.  C.  February  4,  1915. 

Spears,  John  R.  Story  of  the  American  Merchant  Marine.  2d 
ed.  $1.50.  Macmillan.  1915. 

*United  States.  Department  of  Commerce.  Bureau  of  Foreign 
and  Domestic  Commerce.  Special  Agents  Series  No.  119. 
Government  Aid  to  Merchant  Shipping. 

United  States.  59th  Congress,  ist  Session.  House  Doc.  No.  564. 
Development  of  the  American  Merchant  Marine  and  Ameri- 
can Commerce  (Memoranda  of  the  Merchant  Marine  Com- 
mission). Govt.  Ptg.  Off.,  Wash.  1906. 

United  States.  59th  Congress,  ist  Session.  Senate  Doc.  No  141. 
Development  of  the  American  Merchant  Marine  and  Ameri- 
can Commerce:  Presented  by  Mr  Gallinger.  Govt.  Ptg.  C  <fice. 
Wash.  1906. 

United  States.  Navigation  Laws  of  the  United  States.  $i.  Supt. 
of  Doc.  Wash.,  D.  C.  1915. 

*United  States.  63d  Congress,  2d  Session.  House  Report  No. 
1149.  Government  Ownership  and  Operation  of  Merchant 
Vessels  in  the  Foreign  Trade  of  the  United  States. 

Bound   with   Senate    Report   No.   841,    6jd    Congress,   3d   Session. 

"United  States.  63d  Congress,  2d  Session.  Senate  Doc.  No.  601. 
American  Merchant  Marine:  Article  prepared  by  the  South- 
ern Commercial  Congress  on  the  Proposed  Establishment  of 
a  Merchant  Marine. 

"United  States.  63d  Congress,  3d  Session.  Senate  Report  841. 
Promotion  of  Foreign  Commerce  of  the  United  States  by 
Providing  Adequate  Shipping  Facilities. 

Report  of  the  Committee  on  Commerce  to  accompany  the  Ship  Pur- 
chase Bill,  S.  6856.  Also  contains  House  Report  1149  on  Bill  H.  R. 
18666,  Senate  Doc.  60 1,  American  Merchant  Marine;  and  a  letter  from 
Secretary  Redneld. 

"United  States.    63d  Congress,  3d  Session.     Senate  Report  841, 
Part  2.     Promotion    of    Foreign    Commerce    of    the    United 
States  by  Providing  Adequate  Shipping  Facilities. 
Minority    Report    of   the    Committee    on    Commerce    to   accompany   the 

Ship   Purchase  Bill,   S.   6856. 


BIBLIOGRAPHY  xxi 

*Use  and  Benefits  to  Massachusetts  Manufacturers  and  Wage 
Earners  of  an  American  Merchant  Marine.  14?.  pa.  Direc- 
tors of  the  Port  of  Boston.  1915. 


PERIODICALS 

General  References 

American  Economic  Review.  2:814-33.  D.  '12.  Transportation 
and  Competition  in  South  American  Markets.  H.  Parker 
Willis. 

American  Industries.     16:  18-20.  Ja.  '16.    Merchant  Marine. 

p.  18.  Government  Controlled  Merchant  Marine.  Robert  W.  Wool- 
ley;  p.  19.  American  Merchant  Marine  and  Pending  Legislation.  William 
H.  Douglas;  p.  20.  Legislation  Necessary  for  a  Merchant  Marine.  Ber- 
nard N.  Baker. 

American  Journal  of  International  Law.    9:  sup. 120.  Ja.  '15.    Act 
to    Provide    for   the    Admission    of    Foreign-Built    Ships    to 
American  Registry. 
Text    of   Act   of   August   8,    1914. 

Annals  of  the  American  Academy.  38:621-37.  S.  'u.  Shipping 
Facilities  Between  the  United  States  and  South  America. 
William  E.  Humphrey. 

Annals  of  the  American  Academy.  55  :  17-47.  S.  '14.  Extent  of 
Regulation  of  Ocean  and  Inland  Water  Transportation  by  the 
Federal  Government.  Grover  G.  Huebner. 

Annals  of  the  American  Academy.  55 : 48-74.  S.  '14.  Historical 
Development  of  Steamship  Agreements  and  Conferences  in 
the  American  Foreign  Trade.  Paul  Gottheil. 
Annals  of  the  American  Academy.  55:75-111.  S.  '14.  Steam- 
ship Line  Agreements  and  Affiliations  in  the  American  For- 
eign and  Domestic  Trade.  S.  S.  Huebner. 

Annals  of  the  American  Academy.  55:  112-43.  S.  '14.  Adminis- 
tration and  Enforcement  of  Steamship  Conferences  and 
Agreements.  William  H.  S.  Stevens. 

Annals  of  the  American  Academy.  55:  194-204.  S.  '14.  Agree- 
ments and  Conferences  in  Their  Relation  to  Ocean  Rates. 
William  Boyd. 

Annals  of  the  American  Academy.  55 : 252-5.  3.  '14.  Methods 
of  Controlling  Competition  Between  Domestic  Carriers  by 
Water. 


xxii  BIBLIOGRAPHY 

Annals  of  the  American  Academy.  55 : 263-74.  S.  '14.  Bill  to 
Regulate  Carriers  by  Water  Engaged  in  the  Foreign  and  In- 
terstate Commerce  of  the  United  States. 

Annals  of  the  American  Academy.  60:52-7.  Jl.  '15.  Import- 
ance of  an  American  Merchant  Marine.  Bernard  N.  Baker. 

Annals  of  the  American  Academy.  61 : 81-5.  S.  '15.  Transpor- 
tation Facilities  Needed  for  Latin  American  Trade.  Welding 
Ring. 

Arena.  36 : 265-72.  S.  '06.  Cause  and  Cure  of  Our  Marine  De- 
cay. William  W.  Bates. 

Atlantic  Monthly.  104 :  13-22.  Jl.  '09.  Wanted :  An  American 
Merchant  Marine. 

Atlantic  Monthly.  106:740-4.  D.  '10.  One  Way  to  an  American 
Merchant  Marine.  Francis  T.  Bowles. 

Atlantic  Monthly.  113:796-803.  Je.  '14.  Wanted:  An  American 
Minister  of  Marine.  Alexander  G.  McLellan. 

Atlantic  Monthly.  115:271-81.  F. '15.  Present  Merchant  Marine 
Problem.  William  C.  Redfield. 

Cassier's.  27:3-11.  N.  '04.  World's  Ocean-going  Trade.  Brys- 
son  Cunningham. 

*Century.  90:200-7.  Je.  '15.  American  Merchant  Marine.  John 
H.  Thomas. 

Chautauquan.  34 : 375-80.  Ja.  '02.  Merchant  Marine  of  the 
World.  Paul  S.  Reinsch". 

Collier's.  47:16-7.  Jl.  29,  'n.  Problem  of  American  Ships. 
Arthur  Ruhl. 

Congressional  Record. 

Consult  indexes  to  files  from  December  7,   1914,  to  date  for  president's 

message,   and  for   speeches  and  debate  on  bills  S.  6856,  H.    R.   10,500  and 

H.    R.    15,455   for  an  American   merchant   marine. 

Cosmopolitan.  48:445-54.  Mr.  '10.  Selling  a  Nation's  Birth- 
right. Lewis  Nixon. 

Cosmopolitan.  48 : 605-13.  Ap.  '10.  Crime  of  Our  Vanished 
Ships.  Lewis  Nixon. 

Current  Opinion.  58:  71-2.  F.  '15.  Coming  Battle  Royal  in  Con- 
gress Over  the  Shipping  Bill. 

Current  Opinion.  59:276.  O.  '15.  American  Ships  and  Ship- 
ping— The  Merchant  Marine  Question.  Agnes  C.  Laut. 

Current  Opinion.  60:63-4.  Ja.  '16.  A  Point  Missed  in  the 
Seaman's  Bill. 

Current  Opinion.  60:287-9.  Ap.  '16.  Tremendous  Boom  in 
American  Shipping. 


BIBLIOGRAPHY  xxiii 

Everybody's.  26:316-24.  Mr. '12.  Ships  for  Americans.  John  L. 
Mathews. 

Harper's  Weekly.  51 : 340.  Mr.  9,  '07.  Where  American  Enter- 
prise Has  Failed.  Frederic  Austin  Ogg. 

Independent.  70:448-52.  Mr.  2,  'n.  Real  Value  of  a  Merchant 
Marine.  Jacob  H.  Gallinger. 

Independent.  81 : 210.  F.  8,  '15.  Both  Sides :  Shall  We  Have  a 
Government-Owned  Merchant  Marine? 

Briefs   and   references  for    both   affirmative   and   negative. 

"Independent  86:257.  My.  15,  '16.  What  the  War  Has  Done 
to  Shipping. 

international  Marine  Engineering.  19:123-5.  Mr.  '14.  Lloyd's 
Summary  of  World's  Shipbuilding. 

International  Marine  Engineering.  21 : 98-106.  Mr.  '16.  Ship- 
building and  Shipping  Situation:  Views  of  Leaders  in  the 
Marine  Field  on  Business  Conditions  and  the  Upbuilding  of 
the  American  Merchant  Marine. 

International  Marine  Engineering.  21 :  109-12.  Mr.  '16.  New 
and  Constructive  Policy  for  Upbuilding  the  American  Mer- 
chant Marine.  Bernard  N.  Baker. 

Iron  Age.  94:356-8.  Ag.  6,  '14.  How  the  Need  for  an  Ameri- 
can Merchant  Marine  Should  now  Be  Met.  James  T. 
M'Cleary. 

Iron  Age.  95  :247-5o.  Ja.  28,  '15.  Sharp  Passage  on  Merchant 
Marine. 

A  resume   of  the   proceedings   of  the   National   Foreign   Trade   Council 
in  convention  at   St.   Louis,  January  21-22. 

Iron  Age.  95 : 849.  Ap.  15,  '15.  Small  Production  of  Merchant 
Ships. 

Literary  Digest.  50:81-2.  Ja.  16,  '15.  President's  Plan  for  a 
Commercial  Navy. 

Literary  Digest.  51:565.  S.  n, '15.  How  Our  Merchant  Marine 
Has  Grown. 

Literary  Digest.  51:1126.  N.  13,  '15.  Ship-Famine  After  the 
War  Predicted. 

Living  Age.  285 :3O7-io.  My.  I,  '15.  American  Merchant  Ma- 
rine. Sydney  Brooks. 

McBride's  Magazine.  97 :  53-60.  Mr.  '16.  Just  Why  We  Haven't 
a  Merchant  Marine.  Samuel  Crowther. 

Moody's  Magazine.  19:196.  Ap.  '16.  Japanese  Shipping  Pros- 
perity. 


xxiv  BIBLIOGRAPHY 

Moody's  Magazine.  19:201-4.  Ap.  '16.  Renaissance  of  Ameri- 
can Shipbuilding.  Theodore  A.  Frey. 

Nation.  100:617-18.  Je.  3,  '15.  South  America  and  the  Shipping 
Question. 

*Nation.  102:294.  Mr.  9,  '16.  Fortunes  of  the  Shipping  In- 
dustry. 

National  Economic  League  Quarterly.  1:5-11.  My.  '16.  Res- 
toration of  Our  Merchant  Marine.  William  H.  Lincoln. 

Nation's  Business,  p.  4.  Mr.  15,  '15.  Government  Ownership  of 
Merchant  Vessels. 

Nation's  Business,  p.  18-19.  N.  '15.  What  Is  the  American 
Merchant  Marine? 

New  Republic.    1 :  18-19.  Ja.  16,  '15.    Ship  Purchase  Bill. 

New  Republic.  2:42-3.  F.  13,  '15.  American  Merchant  Marine. 
Richard  Spillane. 

New  Republic.  4:225-7,  254-6,  279-81,  302-4,  332-4;  5:  I4-I5-  O. 
2-N.  6,  '15.  Economics  of  American  Shipping.  Gerard  Hen- 
derson. 

*North  American  Review.  180:360-74.  Mr.  '05.  Merchant  Ma- 
rine Investigation.  James  W.  Garner. 

North  American  Review.  191 : 29-38.  Ja.  '10.  How  We  Can 
Have  American  Ships  for  the  Panama  Canal.  Bernard  N. 
Baker. 

North  American  Review.  203 :  25-34.  Ja.  '16.  Seamanship  and 
the  Merchant  Marine.  Lincoln  Colcord. 

Outlook.  94:124-30.  Ja.  15,  '10.  Revival  of  Our  Shipping.  Al- 
fred Spring. 

Outlook.  109:154-5.  Ja.  27,  '15.  Ship  Purchase  Bill  and  the 
New  York  Chamber  of  Commerce. 

Outlook.  109:289-93.  F.  3,  '15.  Will  the  Shipping  Bill  Help  or 
Hurt  Our  Commerce?  Agnes  C.  Laut. 

Outlook.  110:592-3.  Jl.  14,  '15.  Death  Knell  of  a  Government 
Merchant  Marine. 

*Proceedings  of  the  Academy  of  Political  Science  (N.  Y.). 
6:48-60.  O.  '15.  What  Congress  Should  Do  to  Develop  An 
American  Mercantile  Marine.  Robert  L.  Owen. 

Proceedings  of  the  Academy  of  Political  Science  (N.  Y.).  6:83- 
6.  O.  '15.  Problem  of  the  Merchant  Marine.  Bernard  N. 
Baker. 

Proceedings  of  the  Academy  of  Political  Science  (N.  Y.).  6:87- 
9.  O.  '15.  Our  Mercantile  Marine.  Albert  M.  Mathewson. 


BIBLIOGRAPHY  xxv 

Proceedings  of  the  Academy  of  Political  Science  (N.  Y.).  6:90- 
6.  O.  '15.  La  Follette  Law  from  the  Consumers'  Point  of 
View.  Florence  Kelley. 

*Proceedings  of  the  Academy  of  Political  Science  (N.  Y.). 
6:  174-84.  O.  '15.  Probable  Effects  of  the  War  On  the  For- 
eign Trade  of  the  United  States.  Grover  G.  Huebner. 

Railway  Age  Gazette.  59 :  1052-3.  D.  3,  '15.  Freight  Congestion 
at  Atlantic  Seaboard. 

Railway  Review.  57:830-2.  D.  25,  '15.  Transportation  and  For- 
eign Trade.  Emory  R.  Johnson. 

Review  of  Reviews.  30 :  675-7.  D.  '04.  Merchant  Marine  Com- 
mission. Winthrop  L.  Marvin. 

Review  of  Reviews.  50:329-33.  S.  '14.  War  and  Our  Ocean 
Trade.  Winthrop  L.  Marvin. 

Scientific  American.  104:426-7.  Ap.  29,  '11.  American  Mer- 
chant Marine :  An  Expert  Analysis  of  an  Important  Eco- 
nomic Problem.  F.  T.  Bowles. 

Scientific  American.  105:44-5.  Jl.  15,  '11.  American  Merchant 
Marine:  Amazing  Growth  and  Rapid  Decline  of  American 
Shipping.  Eugene  T.  Chamberlain. 

Scientific  American.  105:46-7.  Jl.  15,  '11.  Only  Way  to  Re- 
store the  American  Merchant  Marine:  Preferential  Duties. 
William  Sulzer. 

Scientific  American.  105:48-9.  Jl.  15,  'n.  Our  Merchant  Marine 
and  the  South  American  Republics.  John  Barrett. 

Scientific  American.  105 :  295.  S.  30,  'n.  Free  Ships  vs.  Discrim- 
inatory Duties.  Charles  Depesee. 

Scientific  American.  106:379.  Ap.  27,  '12.  Merchant  Marine  a 
National  Issue.  Charles  Depesee. 

Scientific  American.  107 :  75.  Jl.  27,  '12.  Compromise  Plan  for 
Upbuilding  Our  Merchant  Marine.  W.  Arnold  Hosmer. 

Scientific  American.  108 : 223.  Mr.  8,  '13.  To  Upbuild  the  Mer- 
chant Marine.  Charles  Depesee. 

Scientific  American.  111:282-3,  303,  324.  O.  3-17,  '14.  Our  Mer- 
chant Marine — Past,  Present  and  Future.  Winthrop  L.  Mar- 
vin. 

Scientific  American  Supplement.  80:32.  Jl.  10,  '15.  World's 
Shipbuilding. 

Technical  World.  19:651-9.  Jl.  '13.  Everything  But  the  Ships. 
Agnes  C.  Laut. 


xxvi  BIBLIOGRAPHY 

World's  Work.  26:449-70.  Ag.  '13.  More  Ships  Than  Ever  Be- 
fore. Edward  N.  Vose. 

World's  Work.  28:119-21.  S.  '14.  Chance  for  American  Ship- 
ping. Sylvester  Thompson. 

World's  Work.  29:153-9.  D.  '14.  American  Marine.  Burton  J. 
Hendrick. 

Affirmative  References 

Congressional  Record.  52:1769-75.  (current).  Ja.  15,  '15.  Ad- 
dress by  Hon.  J.  W.  Alexander,  Chairman  of  the  Committee 
on  Merchant  Marine  and  Fisheries  of  the  House  of  Repre- 
sentatives, before  the  Boston  Chamber  of  Commerce,  January 
5,  IQI5- 

Engineering  Magazine.    50:505-8.  Ja.  '16.    Pressing  Need  for  a 
Merchant  Marine.     Stuart  G.  Gibboney. 
See  also  p.   501-5. 

^Engineering  Magazine.  50:661-5.  F.  '16.  Imperative  Need  for 
Ships  Owned  by-  Americans.  William  C.  Redfield. 

Forum.  49 : 447-56.  Ap.  '13.  Foreign  Trade  and  Ship  Subsidies. 
Anan  Raymond. 

Independent.  68:729-31.  Ap.  7,  '10.  Ship  Subsidy  a  False  The- 
ory. T.  C.  Burton. 

International  Marine  Engineering.  21 :  107-9.  Mr.  '16.  Analysis 
of  the  Shipping  Bill. 

Nation.    89:500-1.  D.  16,  '09.    Free  Trade  and  British  Shipping. 

Nation.    94:381-2.  Ap.  18,  '12.    Another  Appeal  for  Free  Ships. 

*National  Economic  League  Quarterly.  1 :  12-27.  My.  '16. 
Restoration  of  Our  Merchant  Marine.  Rufus  Hardy. 

Overland  Monthly.  67 : 25-7.  Ja.  '16.  Japanese  Financier's  Views 
on  the  United  States  Merchant  Marine.  George  T.  Marsh. 

Popular  Science  Monthly.  86:347-54.  Ap.  '15.  Extension  of 
Our  Merchant  Marine.  George  William  Norris. 

*Proceedings  of  the  Academy  of  Political  Science  (N.  Y.).  6: 
1-27.  O.  '15.  What  Congress  Has  Done  to  Build  Up  an  Ameri- 
can Merchant  Marine.  Duncan  U.  Fletcher. 

Proceedings  of  the  Academy  of  Political  Science  (N.  Y.).  6:  74- 
82.  O.  '15.  Present  Problems  of  American  Shipping.  Gerard 
Henderson. 

'Railway  Ape  Gazette.  59: 1063.  D.  3,  '15.  Shipping  Bill.  W.  L. 
Stoddard. 

Railway  Review.    57:762-3.  D.  u,  '15.    President's  Message. 


BIBLIOGRAPHY  xxvii 

*Scientific    American.     112:177,    185.    F.    20,    '15.     Government 

Ship  Purchase  Bill ;  a  Defense  of  the  Administration's  Policy. 

Joshua  W.  Alexander. 
World's   Work.    30 : 267-8.   Jl   '15.    Against  a   Subsidy  of  Any 

Kind. 

Negative  References 
Annals  of  the  American  Academy.     37:738-42.  My.  '11.     Closer 

Commercial    Relations    With    Latin-America.      Bernard    N. 

Baker. 
Atlantic  Monthly.   104:433-41.  O.  '09.  American  Ships  and  the 

Way  to  Get  Them.    Winthrop  L.  Marvin. 

Same    article    condensed.     Review    of    Reviews.     40:627-9.     November, 
1909. 
*Congressional    Record.      53:9140-1     (current).      My.    16,    '16. 

Speech,  in  the  House  of  Representatives,  May  16,  1916.   Lind- 

ley  H.  Hadley. 
Independent.     68:731-4.  Ap.  7,  '10.     Revival  of  Our  Merchant 

Marine.  .  Chauncey  M.  Depew. 
Iron   Trade   Review.     56:17-20.  Ja.   7,   '15.     American   Oversea 

Trade.    Ralph  D.  Williams. 
Living  Age.    284:440-2.  F.  13,  '15.    American  Government  as  a 

Shipowner. 

Nation.     100:41-2.  Ja.  14,  '15.     Ship-Purchase  Bill. 
Nation.     102:154-5.  F.  10,  '16,    Circumlocution  Ships. 
*National  Economic  League  Quarterly,     i :  28-38.  My.  '16.     Ad- 
dress, by  Winthrop  L.  Marvin. 
*Nation's  Business.    4:  No.  2.  Pt.  2.  p.  9-10.  F.  '16.    Proceedings 

of  the  Fourth  Annual  Meeting  of  the  Chamber  of  Commerce 

of  the  United  States :  Referendum  No  9 — Merchant  Marine. 
Nation's  Business.     4:  No.  2.  Pt.  2.  p.  58-62,  84.  F.  '16.     How 

Shall  We  Get  a  Merchant  Marine?    Report  of  the  Committee 

of  the  U.  S.  Chamber  of  Commerce. 
New  England  Magazine.     52 : 293-5.  Ap.  '15.     Some  Follies  and 

Dangers  of  the  Ship  Purchase  Bill. 
New  Republic.    6:88-9.  F.  26,  '16.    The  Shipping  Bill. 
Outlook.     108:120-1.   S.  16,  '14.     Shall  the  United   States  Buy 

Ships? 

Outlook.     109:119-20.  Ja.  20,  '15.     Shipping  Bill. 
Outlook.     109 : 242.  F.  3,  '15.     Senator  Lodge  on  the  Shipping 

Bill. 


xxviii  BIBLIOGRAPHY 

Outlook.     109:308-10.  F.  10,  '15.     Ship  Purchase  Bill. 

Outlook.    109:430-3.  F.  24, '15.    Shipping  Bill  and  March  Fourth. 

Henry  C.  Lodge. 
*Proceedings  of  the  Academy  of  Political  Science  (N  Y.).  6:  28- 

47.  O.  '15.    American  Merchant  Marine.    John  W.  Weeks. 
*Proceedings  of  the  Academy  of  Political  Science  (N.  Y.).  6:  65- 

73-  O.  'i5-     Development  of  the  American  Merchant  Marine. 

Welding  Ring. 
Scientific  American.     105:50.  Jl.   15,  'n.     Merchant  Marine  as 

an  Auxiliary  to  the  Navy.    T.  G.  Roberts. 

Scientific  American.     111:455.  D.  5,  '14.     Problem  of  Our  Mer- 
chant Marine.    Charles  Depesee. 

Scientific  American.     112:94.  Ja.  30,  '15.     Shipping  Bill  Fallacy. 
Scientific  American.    112:  197.  F.  27,  '15.    Government  Ship  Pur- 
chase Bill.    Theodore  E.  Burton. 
Scientific   American.      113:534.    D.    18,    '15.     President   on    Our 

Merchant  Marine. 
Scientific   American.      114:120.   Ja.   29,    '16.      Preparedness   and 

Our  Merchant  Marine. 
Scientific  American  Supplement.     81 :  70-1,  94-6.  Ja.  29-F.  5,  '16. 

Our  Merchant  Marine. 
Spectator.     114:39-40.  Ja.  9,   '15.     American   Government   as  a 

Shipowner. 
Spectator.     114:76-7.   Ja.    16,   '15.     American   Government   as   a 

Shipowner. 
'Unpopular  Review.    5  :  306-17.  Ap. '16.    Why  Our  Shipping  Has 

Declined. 


SELECTED    ARTICLES    ON    THE 
AMERICAN  MERCHANT  MARINE 


INTRODUCTION 

When  the  student  of  the  American  merchant  marine  begins 
his  investigation  of  the  subject  he  finds  the  following  situation 
existing:  In  1789  the  total  amount  of  United  States  shipping 
registered  for  foreign  trade  was  123,893  tons  and  the  proportion 
of  American  exports  and  imports  carried  in  American  vessels 
was  23.6  per  cent.  (These  figures  are  quoted  from  the  report 
of  the  Bureau  of  Navigation  and  Bureau  of  Foreign  and  Do- 
mestic Commerce  of  the  Department  of  Commerce.) 

If  he  continues  to  study  the  figures  quoted  in  this  report  he 
also  finds  that  the  total  of  American  tonnage  increased,  with  oc- 
casional lapses,  to  804,851  tons  in  1817,  dropped  back  to  537,563 
tons  in  1830,  and  reached  its  highest  point  of  2,496,894  tons  in 
1861.  Then  tonnage  began  to  drop  off  gradually,  reaching  its 
lowest  point  in  1898,  when  it  registered  726,213  tons,  increasing 
gradually  again  to  1,066,288  tons  in  1914.  According  to  Lloyd's 
Register,  Great  Britain's  tonnage  for  1915  was  21.045,049  tons, 
Germany's  was  5,459,296,  while  the  tonnage  of  the  United  States 
was  estimated  at  a  total  of  5,368,194,  of  which  only  2,970,284 
tons  in  all  were  estimated  to  be  in  the  foreign  trade. 

Referring  to  the  former  table  again  the  student  finds  that  the 
proportion  of  our  foreign  trade  carried  in  American  vessels  was 
23.6  per  cent  in  1789,  reached  92  per  cent  in  1796,  dropped  back 
to  54.5  per  cent  in  1814,  reached  the  level  of  92.5  per  cent  in  1826, 
and  then  dropped  almost  steadily  up  to  the  present  time  to  the 
low  figure  of  8.6  per  cent. 

Thus  the  student  is  confronted  at  the  outset  not  only  by  the 
fact  that  the  total  amount  of  American  foreign  shipping  is  low 
as  compared  with  that  of  other  large  nations,  but  that  it  has  not 
increased  at  a  rate  commensurate  with  the  general  increase  in 
growth  and  prosperity  of  the  country.  He  is  also  brought  to 


2.    ,  -  SELECTED   ARTICLES 

realize  that  the  proportion  of  our  foreign  shipping  carried  by 
American  ships  is  decreasing  rather  than  increasing,  and  that  the 
United  States  is  gradually  being  forced  to  one  side  in  its  own 
foreign  carrying  trade. 

These  conditions  have  been  realized  for  many  years,  and 
Congress  has  been  appealed  to  repeatedly  by  the  shippers  and 
business  interests,  for  legislation  that  would  bring  relief.  Very 
little  in  the  way  of  constructive  action  has  been  undertaken,  how- 
ever, and  such  legislation  as  has  been  enacted,  has  apparently 
availed  little  to  remedy  the  situation.  The  European  War,  how- 
ever, has  served  to  bring  home  more  plainly  than  ever  the  needs 
of  American  shipping  and  the  lack  of  a  constructive  govern- 
mental policy.  As  a  result  there  is  now  before  Congress  a  bill 
to  establish  a  government-owned  merchant  marine.  Before  set- 
ting forth  briefly  the  terms  of  the  proposed  legislation  it  is  well 
to  review,  in  short  compass,  the  past  history  of  the  American 
merchant  marine. 

At  the  close  of  the  Revolution,  England  had  the  balance  of 
the  foreign  carrying  trade  in  her  favor.  The  abundance  of 
timber  in  the  United  States  and  the  native  genius  of  the  Ameri- 
can enabled  us  to  compete  by  building  better  ships  at  a  lower 
cost.  The  first  act  of  Congress  passed  under  the  new  Constitu- 
tion, on  July  4,  1789,  allowed  a  discount  of  10  per  cent  of  the 
tariff  duties  on  all  goods  imported  in  ships  built  and  owned  by 
American  citizens.  A  further  rebate  was  allowed  on  tea  im- 
ported from  the  East  Indies  in  American  vessels.  Another  act 
of  Congress  gave  American  vessels  further  advantages  in  ton- 
nage duties  and  practically  barred  foreign  vessels  from  the  coast- 
wise trade. 

In  1794  the  discount  of  10  per  cent  in  tariff  duties  on  goods 
imported  in  American  vessels  was  changed  to  an  addition  of  10 
per  cent  to  the  duties  on  goods  imported  in  foreign  vessels.  With 
this  encouragement  American  tonnage  increased  from  123,893  in 
1789  to  411,438  in  1792.  The  proportion  of  our  exports  and  im- 
ports carried  in  American  ships  rose  from  23.6  per  cent  in  1789  to 
92  per  cent  in  1807. 

Then  came  the  War  of  1812,  and  at  its  close  the  United  States 
largely  abandoned  its  policy  of  preferential  duties  by  offering  to 
make  treaties  with  other  nations  by  the  terms  of  which  the 
preferential  duties  on  goods  imported  in  American  ships  would 
be  given  up  provided  other  nations  would  reciprocate.  The  gen- 


AMERICAN   MERCHANT   MARINE  3 

eral  effect  of  abandoning  this  protective  policy  appears  to  have 
had  unfavorat^e  results.  While  American  shipping  continued  to 
increase  slowly  up  to  1840,  the  advance  was  very  much  less  than 
it  had  been  during  the  period  of  protection. 

Beginning  with  1840  the  British  government  began  a  new 
form  of  encouragement  to  her  shipping  by  granting  subsidies  to 
certain  steamship  lines.  This  was  the  means  of  establishing 
control  of  steamship  navigation  in  English  hands.  Later,  France 
and  other  nations  followed  England's  lead,  and  the  United 
States  stood  alone  in  refusing  to  grant  a  subsidy.  This  prevented 
steamship  lines  from  being  undertaken  by  American  capital,  and 
our  sail-packets  could  no  longer  compete.  Finally,  in  1845,  Con- 
gress authorized  the  Postmaster-General  to  make  mail-contracts 
with  American  lines,  and  under  this  act  certain  amounts  were 
paid  in  mail  subsidies.  This  Mail  Subsidy  Act  was  repealed  in 
1855,  due  to  sectional  feeling.  The  ships  were  mostly  northern 
and  the  South  was  in  power. 

Other  conditions  also  operated  to  reduce  our  American  mer- 
chant marine  at  this  period.  Vessels  began  to  be  built  of  iron 
instead  of  wood,  and  American  shipbuilders  could  not  compete 
with  England  in  the  building  of  iron  vessels.  The  Civil  War 
operated  to  destroy  or  otherwise  reduce  the  number  of  ships  then 
available  for  the  foreign  trade.  Shipping  dropped  gradually  and 
steadily  until  1898,  when  it  was  only  726,213  tons.  Since  then 
there  has  been  a  material  gain. 

After  the  repeal  of  the  Ocean-Subsidy  Act  in  1855  no  other 
legislation  was  enacted  for  the  relief  of  American  shipping  until 
1891.  Then  the  Ocean  Mail  Act  was  passed  providing  subsidies 
for  postal  lines.  Although  the  amounts  granted  were  compara- 
tively small,  this  Act  has  been  of  much  assistance. 

In  1904  a  Merchant  Marine  Commission  was  appointed  by 
Congress  to  make  a  thorough  investigation  of  the  ocean  carrying 
trade.  This  Commission  held  hearings  in  various  parts  of  the 
country  and  finally  published  a  report  in  1905  recommending 
national  encouragement  in  the  establishment  of  regular  lines  to 
the  West  Indies,  South  America,  South  Africa,  and  the  Orient. 
A  bill  carrying  these  provisions  was  introduced  in  Congress  but 
failed  to  pass. 

In  1912  an  attempt  was  made  to  bring  American-owned  ves- 
sels in  the  foreign  trade  under  American  registry  by  including  in 
the  Panama  Canal  Act  of  August  24,  1912,  a  provision  offering 


4  SELECTED   ARTICLES 

free  registry  for  ocean  trade  to  American-owned  foreign-built 
vessels  not  more  than  five  years  old.  So  few  vessels  took 
advantage  of  the  Act  that  on  August  18,  1914,  an  emergency 
measure  was  passed  providing  that  American-owned,  foreign- 
built  vessels  could  be  admitted  to  American  registry,  regardless 
of  age.  The  President  was  also  authorized  to  suspend  certain 
requirements  of  law  regarding  the  nationality  of  the  officers  of 
such  vessels — and  to  exempt  them  from  compliance  with  our 
measurement  and  inspection  laws.  This  has  been  effective  in 
enrolling  a  number  of  such  ships  under  the  American  flag. 

Another  law  recently  passed  affecting  American  shipping  is  the 
Seaman's  Act  of  1915  increasing  the  requirements  for  the  health 
and  comfort  of  the  seamen  engaged  on  American  vessels,  and 
for  greater  safety  at  sea.  American  shipowners  claim  that  this 
largely  increases  the  cost  of  operation  and  makes  it  more  diffi- 
cult for  American  ships  to  compete  with  those  of  other  nations. 

These  are  the  events  leading  up  to  the  legislation  now  pending 
before  Congress.  On  September  4,  1914,  a  bill  (H.  R.  1866)  was 
introduced  in  the  House  of  Representatives  by  J.  W.  Alexander, 
Chairman  of  the  House  Committee  on  Merchant  Marine  and 
Fisheries,  providing  for  government  ownership  and  operation  of 
merchant  vessels  in  the  foreign  trade  of  the  United  States.  This 
bill  passed  the  House  but  was  lost  in  the  Senate.  The  matter 
was  again  urged  by  President  Wilson  in  his  message  of  Decem- 
ber 7,  1914,  and  on  January  26,  1915,  a  substitute  bill  was  intro- 
duced in  the  Senate  by  Senator  Duncan  A.  Fletcher.  This  bill 
proposed  that  government  ownership  and  operation  should  be 
secured  through  a  shipping  board,  which  should  subscribe  to  50 
per  cent  of  the  capital  stock  of  a  corporation  to  be  organized  by 
the  board.  This  bill  also  failed  to  pass.  On  January  31,  1916, 
another  bill  (H.  R.  10,500)  was  introduced  in  the  House  by  Rep- 
resentative Alexander  with  provisions  similar  to  the  above.  On 
May  9  a  substitute  bill  (H.  R.  15,455)  was  reported  by  the  Mer- 
chant Marine  Committee  which  is  the  bill  now  pending.  This 
bill  provides  for  a  Shipping  Board  composed  of  the  Secretary  of 
the  Navy  and  Secretary  of  Commerce  as  members  ex-officio,  and 
five  commissioners  to  be  appointed  by  the  President.  The  board 
is  authorized  to  secure  vessels  needed  for  our  foreign  trade, 
either  by  purchase,  construction,  lease,  or  charter,  and  to  charter, 
lease  or  sell  any  of  these  vessels  as  seems  advisable  to  private 
citizens  of  the  United  States.  The  board  is  also  authorized  to 


AMERICAN   MERCHANT   MARINE  5 

form  a  corporation  for  the  purpose  of  engaging  in  shipping,  capi- 
tal stock  not  to  exceed  $50,000,000.  It  is  also  given  certain  du- 
ties of  regulation  over  private-owned  American  shipping. 

Recent  discussions  and  hearings  held  by  such  bodies  as  the 
United  States  Chamber  of  Commerce,  the  National  Foreign  Trade 
Council,  and  others,  show  that  while  business  men  are  in  favor  of 
a  non-partisan  shipping  board  to  control  our  foreign  shipping  they 
are  generally  opposed  to  the  feature  of  government  ownership 
and  control.  The  reprints  which  have  been  selected  for  this  vol- 
ume describe  the  principal  events  leading  up  to  the  present  condi- 
tion of  our  American  shipping  and  also  discuss  at  length  the 
leading  arguments  advanced  for  and  against  government  owner- 
ship of  an  American  merchant  marine. 

E.  M.  P HELPS. 
July  29,  1916. 


GENERAL  DISCUSSION 


THE  AMERICAN  MERCHANT  MARINE:    WHAT 

IT  HAS  BEEN,  WHAT  IT  IS,  WHAT  IT 

OUGHT  TO  BE1 

A  concise  account  of  the  rise  and  decline  of  our  overseas 
shipping  industry  is  helpful  to  a  right  understanding  of  the 
present-day  problem  of  the  American  merchant  marine.  This 
problem  relates  wholly  to  that  part  of  our  merchant  marine  that 
is  engaged  in  the  external  trade  of  the  United  States — the  trade 
with  the  ports  of  foreign  nations.  The  home  trade  of  the  United 
States  on  ocean,  lake  or  river  has  been  reserved  to  American 
vessels  ever  since  the  founding  of  the  federal  government.  Un- 
der this  policy  our  coastwise  tonnage  has  grown  steadily  from 
68,607  in  1789  to  6,852,536  in  1914.  This  is  incomparably  the 
greatest  coastwise  shipping  in  the  world,  greater  than  the  entire 
coastwise  and  overseas  tonnage  of  the  German  Empire,  or  equi- 
valent to  threefold  the  entire  tonnage  of  France  or  Norway  and 
fourfold  the  tonnage  of  Japan.  American  coastwise  navigation 
is  a  well-developed  and  reasonably  prosperous  business,  a  trade 
of  vigorous  competition,  dominated  by  no  trust  or  monopoly  and 
steadily  and  swiftly  growing.  It  needs  no  more  national  en- 
couragement and  it  asks  none. 

But  with  the  shipping  registered  for  trade  overseas  it  is  very 
different.  Normally,  this  should  be  by  far  the  larger  proportion 
of  our  merchant  marine;  actually,  it  has  shrunk  to  such  relative 
insignificance  that  on  June  30,  1914,  one  month  before  the  out- 
break of  the  European  war,  our  shipping  registered  for  foreign 
commerce  amounted  to  only  1,066,288  tons,  or  less  than  one-sixth 
of  our  home  trade  shipping. 

More  than  a  century  ago,  in  the  year  1810,  the  United  States, 
with  only  one- fourteenth  of  the  population  of  today,  had  981,019 
tons  of  shipping  registered  for  foreign  commerce,  and  was  carry- 

1  Report  of  the  Special  Committee  of  the  Boston  Chamber  of  Com- 
merce. 


8  SELECTED   ARTICLES 

ing  under  its  own  flag  91.5  per  cent  of  its  own  imports  and  ex- 
ports. In  the  fiscal  year  1914,  American  ships  conveyed  only  8.6 
per  cent  of  our  imports  and  exports. 

This  very  great  expansion  of  our  coastwise  shipping,  even 
against  the  intensifying  competition  of  the  railroads,  stands  in 
sharp  contrast  with  the  long  decline  of  our  overseas  shipping, 
and  is  manifestly  to  be  explained  by  the  fact  that  in  the  one 
trade  it  is  American  against  American,  with  substantial  equality 
in  wages  and  other  conditions,  while  in  the  other  it  is  American 
against  foreigner,  with  the  overwhelming  advantage  of  lower 
wages  and  requirements  and  certain  powerful  forms  of  national 
assistance  on  the  foreign  side. 

Early  Shipping  Laws 

Though  Americans  of  the  colonial  period  won  success  as 
shipbuilders  and  seamen,  the  effect  of  the  Revolution  was  such 
that  at  its  end,  in  "the  critical  period  of  American  history,"  most 
of  our  overseas  carrying  trade  fell  into  the  hands  of  British 
shipowners.  Our  entire  merchant  fleet  registered  for  foreign 
commerce  amounted  to  only  123,893  tons  in  1789,  and  only  23.6 
per  cent  of  our  own  trade  was  being  conveyed  in  American  ves- 
sels. In  other  words,  the  condition  >of  the  ocean  shipping  busi- 
ness of  this  country,  when  the  federal  Constitution  was  adopted 
and  Washington  became  the  first  President,  was  not  very  unlike 
its  condition  at  the  present  time. 

Washington,  Adams,  Jefferson  and  Madison  all  joined  in  urg-f 
ing  immediate  relief  for  the  merchant  shipping  industry,  and  the* 
very  first  act  of  the  first  Congress  under  the  new  Constitution,, 
passed  on  July  4,  1789,  "for  the  support  of  the  government,  the, 
discharge  of  the  debts  of  the  United  States  and  the  encourage-, 
ment  and  protection  of  manufactures,"  contained  an  important 
clause  allowing  a  discount  of  10  per  cent  of  the  tariff  duties  on 
all  goods  imported  in  ships  built  and  owned  by  American  citi- 
zens. Moreover,  on  tea  imported  direct  from  the  East  Indies  in 
American  vessels  a  further  and  far  heavier  rebate  was  provided, 
and  the  third  act  of  this  ne-w  Congress,  on  July  20,  1789,  gave 
American  vessels  a  marked  preference  in  tonnage  duties  and 
virtually  barred  foreign  vessels  from  the  coastwise  trade.  In 
1794,  i°  place  of  a  discount  of  10  per  cent  in  the  tariff  duties  on 
goods  imported  in  American  vessels,  10  per  cent  was  added  to 
the  duties  on  goods  imported  in  foreign  vessels — a  change  of 


AMERICAN   MERCHANT   MARINE  9 

method,  but  not  of  principle.  There  was  no  sectional  or  party 
division  over  this  early  legislation  for  the  encouragement  of  the 
American  merchant  marine.  Thomas  Jefferson  of  Virginia,  then 
Secretary  of  State,  wrote  in  1794,  "To  force  shipbuilding  is  to 
establish  shipyards;  is  to  form  magazines;  to  multiply  useful 
hands;  to  produce  artists  and  workmen  of  every  kind  who  may 
be  found  at  once  for  the  peaceful  speculations  of  commerce  and 
for  the  terrible  wants  of  war." 

Success  of  the  Preferential  Duties 

These  laws  of  the  founders  of  our  government,  so  frankly 
and  strongly  preferential  to  American  shipping,  instantly  de- 
stroyed the  British  monopoly  of  three-quarters  of  our  ocean  car- 
rying. As  a  historian  of  the  period  has  well  said,  "The  growth 
of  American  shipping  from  1789  to  1807  is  without  parallel  in 
the  history  of  the  commercial  world."  American  tonnage  regis- 
tered for  overseas  commerce  increased  at  once  from  123,893  in 
1789  to  346,254  in  1790,  363,110  in  1791  and  411,438  in  1792.  It 
was  at  this  time  and  under  this  policy  that  Boston  and  Salem 
laid  the  foundations  of  their  great  East  India  commerce.  The 
proportion  of  our  total  imports  and  exports  carried  in  American 
ships  rose  from  23.6  per  cent  in  1789  to  40.5  per  cent  in  1790,  to 
55.9  per  cent  in  1791  and  to  64  per  cent  in  1792.  By  1795  no  less 
than  90  per  cent  of  our  commerce  was  conveyed  in  American 
vessels.  Foreign  flags,  which  a  few  years  before  had  dominated 
our  commerce  almost  as  completely  as  they  do  today,  well-nigh 
vanished  from  our  ports  of  the  North  Atlantic.  In  1800  there 
were  667,107  tons  of  American  shipping  registered  for  overseas 
voyages,  and  in  1810,  981,019  tons. 

This  wonderful  growth  of  our  ocean  fleet  was  achieved,  in 
spite  of  European  impressment  and  embargo,  through  the  power 
of  wise  laws  which  made  it  advantageous  for  American  mer- 
chants to  employ  American  vessels  whenever  they  had  occasion 
to  bring  goods  from  foreign  lands — and  preferring  these  ships 
for  the  import  trade,  they  naturally  utilized  them  for  the  export 
trade  also.  Thus  assured  of  constant  employment,  American 
shipowners,  building  many  vessels  in  succession  from  the  cheap 
and  abundant  timber  of  the  Atlantic  coast,  developed  models 
that  combined  capacity  with  speed,  and  American  officers  and 
crews  navigated  them  with  the  utmost  skill  and  daring.  National 
encouragement  of  this  maritime  industry  had  quickly  produced  a 


to  SELECTED  ARTICLES 

smartness  and  efficiency,  the  like  of  which  the  world  had  never 
seen. 

Misnamed  "Reciprocity"  and  Its  Results 

So  confident  had  our  statesmen  grown  of  the  superiority  of 
American  ships  under  any  circumstances  that  in  a  commercial 
convention  with  the  British  government,  framed  shortly  after  the 
end  of  the  naval  war  of  1812-1815,  the  United  States  withdrew  its 
preferential  duties  as  against  British  ships  in  the  "direct"  trade 
with  the  United  Kingdom.  Moreover,  under  pressure  from  in- 
land and  agricultural  interests  our  government,  through  commer- 
cial treaties  and  acts  of  Congress,  gradually  withdrew  the  ship- 
ping preference  from  other  trades,  though  this  was  not  com- 
pletely effective  until  1850,  against  our  chief  competitor,  Great 
Britain.  These  "reciprocity"  acts  were  passed  in  the  face  of  the 
earnest  protests  of  the  merchants  and  shipowners  of  the  coast, 
who  best  understood  the  situation. 

American  shipping  continued  to  grow  slowly  up  to  the  Mexi- 
can war  period,  but  there  was  not  again  such  a  marvelous  expan- 
sion as  that  of  1789-1810.  In  1832  a  tonnage  of  614,121  was 
registered  under  the  flag  of  the  United  States,  carrying  83.1  per 
cent  of  our  imports  and  exports;  in  1845  a  tonnage  of  904,476, 
carrying  81.7  per  cent.  Foreign  vessels  were  figuring  more 
largely  in  our  overseas  trade,  but  on  the  other  hand,  our  ships 
were  conveying  a  part  of  the  trade  of  other  nations. 

Just  how  reciprocity  on  the  sea  would  have  resulted  in  the 
long  run  cannot  be  known,  for  it  soon  proved  that  it  was  not 
real  reciprocity  at  all,  but  somethink  very  different  and  delusive. 
The  United  States  in  entire  good  faith,  in  the  years  between  1815 
and  1850,  entered  into  commercial  agreements  with  foreign  gov- 
ernments that  ships  of  either  nation  should  be  admitted  on  terms 
of  equality  into  the  ports  of  the  other  so  far  as  tariff  and  ton- 
nage duties,  etc.,  were  concerned.  In  other  words,  the  prefer- 
ence or  encouragement  which  Washington,  Adams,  Jefferson  and 
Madison  had  given  to  American  shipping  was  step  by  step  aban- 
doned. One  result  was  that  British  ships,  manned  at  a  lower 
wage  scale,  increased  nearly  400  per  cent  in  our  own  ports 
between  1831  and  1840,  while  our  own  ships  gained  but  40  per 
cent  in  all  the  ports  of  the  world. 


AMERICAN   MERCHANT   MARINE  n 

British  Subsidies  to  Steamships 

This  was  while  the  competition  was  with  sail  ships,  wooden  built, 
on  either  side.  But  just  before  1840  the  British  government  be- 
gan to  invoke  a  new  form  of  encouragement.  In  1834  a  subsidy 
of  $85,000  a  year  was  given  to  the  Rotterdam  and  Hamburg 
steam  packets  of  a  British  company,  and  another  subsidy  of 
$150,000  to  the  packet  service  to  Gibraltar.  These  British  royal 
payments  were  found  to  be  so  valuable  in  their  influence  on  the 
new  art  of  steamship  and  engine  building  in  the  United  Kingdom 
that  in  1838  another  and  much  larger  subsidy  was  offered  for  a 
British  steamship  service  across  the  North  Atlantic.  In  the  year 
following  a  subsidy  of  $425,000  a  year  was  secured  by  Samuel 
Cunard  for  a  steam  line  from  Liverpool  to  Halifax  and  Boston. 
"It  is  beyond  question,"  declares  James  Russell  Soley,  the  his- 
torian, "that  the  sum  paid  to  the  Cunard  Company  in  its  early 
days,  amounting  to  about  25  per  cent  per  annum  on  the  cost  of 
the  running  plant,  and  subsequently  increased  to  $550,000,  to 
$750,000  and  to  $850,000,  was  clearly  a  subsidy;  that  it  was  given 
with  the  plain  intention  of  establishing  firmly  in  English  hands 
the  transatlantic  traffic,  and  that  it  accomplished  the  desired 
result." 

Other  British  subsidies' quickly  followed  the  Cunard — to  the 
Royal  Mail  Steam  Packet  Company,  for  lines  to  the  West  Indies, 
Brazil  and  Argentina,  to  the  Pacific  Steam  Navigation  Company 
for  a  line  to  the  west  coast  of  South  America  (this  was  estab- 
lished by  an  American,  William  Wheelwright,  of  Newburyport, 
who  had  first  sought  a  subsidy  in  vain  in  Washington),  to  the 
Peninsular  &  Oriental  for  lines  to  the  East  Indies  and  to  other 
companies  in  all  quarters  of  the  world.  In  a  few  years  British 
subsidies  totalled  $3,000,000  or  $4,000,000  annually. 

The  United  States  had  been  oHitwitted  by  British  diplomacy 
and  statesmanship.  First,  the  preferential  policy  of  Washington 
and  his  colleagues  had  made  American  shipping  the  most  pros- 
perous in  existence.  "That  starred  flag,"  the  London  Times 
lamented,  "is  now  conspicuous  on  every  sea,  and  will  soon  defy 
our  thunder."  But  we  were  adroitly  persuaded  to  lay  aside  the 
weapons  that  had  served  so  well,  and  when  we  had  bound  our- 
selves by  solemn  treaty  no  longer  to  employ  them,  the  British 
government  introduced  the  new  and  potent  expedient  of  subsidy 
which  the  treaties  and  agreements  did  not  forbid. 


12  SELECTED   ARTICLES 

America  Adopts  Subsidies  Also 

This  new  departure  did  not  pass  unchallenged  in  the  United 
States.  It  is  almost  forgotten  now,  but  it  is  a  fact  of  record 
that  the  American  government  for  a  time  resolutely  met  subsidy 
by  subsidy  and  was  brilliantly  successful  in  the  contest.  It  was 
an  American,  Fulton,  who  created  the  first  efficient  steamboat, 
in  the  Clermont  of  1807.  Steam  craft  came  into  immediate  use 
on  rivers,  sounds  and  bays  here,  and  in  1830  appeared  in  the 
ocean  coast  trade.  Ericsson,  with  his  screw  propeller,  was  re- 
buffed in  England,  but  received  and  honored  here,  and  in  1841 
the  first  seagoing  screw  steamship  was  built  for  an  American  line 
from  New  York  to  Havana.  At  that  period  when  the  Cunard 
subsidies  began,  the  United  States  was  clearly  ahead  of  Great 
Britain  in  steam  navigation.  Moreover,  ships  had  begun  to  be 
built  of  iron  here,  the  Bangor,  for  example,  for  New  England 
coast  service,  in  1844.  American  ingenuity  and  enterprise  were  as 
quick  and  competent  to  deal  with  steam  as  with  sail,  with  metal 
as  with  wood.  The  idea  that  iron  steamships  could  not  be  built 
in  the  United  States  before  the  Civil  War  is  the  invention  of 
malice  or  of  ignorance. 

It  is  a  profoundly  significant  fact  that  the  initiative  in  the 
movement  to  meet  British  steamship  subsidies  by  American  sub- 
sidies was  taken  by  Southern  men  who  were  Democrats  in  national 
politics.  Senator  Thomas  Butler  King,  of  Georgia,  was  the 
pioneer.  In  1841,  soon  after  the  first  Cunard  steamers  had 
reached  the  United  States,  he  began  to  advocate  in  Congress  the 
granting  of  mail  subsidies,  no  less  liberal  than  the  British,  to 
put  the  American  flag  into  equal  competition.  "British  states- 
men," he  said,  "are  resolved  to  monopolize  the  intercourse  be- 
tween America  and  Europe.  Of  all  the  lines  of  sail  packets 
which  cross  the  Atlantic  not  one  is  owned  in  Europe,  and  it  is 
not  to  be  doubted  that  American  merchants,  properly  encouraged, 
will  assuredly  excel  in  them  (steamship  lines)  as  they  have  done 
in  sailing  vessels." 

President  Polk,  a  Southern  man  and  a  Democrat,  advocated 
subsidy  legislation  in  his  message  to  Congress.  "The  national 
policy,"  he  said,  "by  which  a  rapid  communication  with  the 
various  distant  ports  of  the  world  is  established,  by  means  of 
American-built  steamers,  would  find  an  ample  reward  in  the 
increase  of  our  commerce,  and  in  making  our  country  and  its  re- 
sources favorably  known  abroad" — but  President  Polk  went  on 


AMERICAN   MERCHANT   MARINE  13 

to  argue  that  the  national  advantage  was  "still  greater  of  having 
powerful  steamships  available  for  war,"  and  "having  the  privi- 
lege of  taking  the  ships  already  equipped  for  immediate  service 
at  a  moment's  notice."  This,  he  declared,  "will  be  cheaply  pur- 
chased by  the  compensation  to  be  paid  for  the  transportation  of 
the  mail  over  and  above  the  postage  received.  A  just  national 
pride,  no  less  than  our  commercial  interests,  would  seem  to 
favor  the  policy  of  augmenting  the  number  of  this  description  of 
vessels." 

The  Collins  American  Line 

So  a  Southern  Democratic  President  wrote,  and  a  Democratic 
Congress  acted  on  his  recommendations,  the  project  being  sup- 
ported by  members  of  Congress  without  regard  to  party  distinc- 
tions. A  subsidy  of  $200,000  was  granted  to  a  new  American 
steamship  line  to  Havre  and  Bremen — less  than  half  the  sum  paid 
to  the  Cunard  line,  and  the  American  ships  were  larger.  This 
was  under  the  ocean  mail  laws  of  1845  and  1847,  by  which  addi- 
tional American  steamship  services  were  established  to  the  West 
Indies,  the  Isthmus  of  Panama  and  up  the  Pacific  coast  to 
Oregon. 

In  1847  a  contract  was  concluded  by  our  government  with  the 
head  of  the  celebrated  Collins  line  of  trans-Atlantic  steamers 
for  a  subsidy  of  $385,000  a  year.  When  Mr.  Collins  built 
steamships  much  larger  and  more  powerful  than  the  Cunard  ships 
his  subsidy  was  increased  to  $858,000  a  year — the  Cunard  line 
was  then  receiving  $856,000  from  the  British  government.  This 
new  American  line  began  under  the  brightest  auspices.  Its 
steamers  beat  the  Cunard  steamers  regularly  in  passages  from 
land  to  land  and  secured  the  bulk  of  the  first-class  passenger 
traffic.  Moreover,  as  Lindsay,  the  historian  of  British  shipping, 
said,  "Before  the  Collins  line  was  established  the  Cunard  steam- 
ers were  receiving  £7  los  sterling  per  ton  for  freight,  which 
was  so  much  a  monopoly  rate  that  in  two  years  after  the  Collins 
line  had  commenced  the  rate  of  freight  fell  to  £4  sterling  per 
ton."  Under  the  impulse  of  the  mail  subsidies,  American  ocean 
steam  shipping  rose  from  16,068  tons  in  1848  to  115,045  tons  in 
1855.  As  Dr.  David  A.  Wells  says  of  the  period : 

During  the  single  year  1849-50  we  increased  our  ocean  steam  ton- 
nage 113  per  cent.,  and  the  seagoing  qualities  and  performances  of  our 
vessels  were  so  admirable  that  the  Cunard  Company,  which  had  then  been 


I4  SELECTED   ARTICLES 

in  operation  ten  years,  was  obliged  to  bring  out  new  ships  to  compete  with 
them.  The  prospect,  therefore,  at  one  time  was  that  the  United  States, 
although  late  in  the  start  in  this  new  department  of  foreign  shipping,  would 
soon  equal,  if  not  overtake,  her  great  commercial  competitor. 

It  was  an  era  also  of  immense  expansion  in  the  sail  shipping 
of  America,  due  to  a  succession  of  extraordinary  causes — the 
famine  of  1847  in  Ireland  and  an  abnormal  demand  for  food- 
stuffs in  Europe,  the  gold  rush  of  1849  to  California  and  the 
Crimean  War  of  1854-1856.  The  famous  American  clippers,  built 
particularly  for  the  California  and  China  trade,  belonged  to  this 
era,  when  in  1855  no  less  than  583,450  tons  of  shipping,  including 
381  ships  and  barks,  were  launched  from  American  yards. 

Losing  Our  Ships  Before  the  War 

In  that  year,  1855,  the  American  merchant'  marine  in  overseas 
commerce  reached  its  climax.  There  set  in  immediately  a  sharp 
and  startling  decline — six  years  before  the  Civil  War.  Though 
the  tonnage  nominally  registered  for  foreign  carrying  did  not 
immediately  show  a  decrease,  shipbuilding  fell  off  from  583.450 
tons  in  1855  to  156,602  tons  in  1859,  and  rallied  only  to  214,797 
tons  in  1860.  This  heavy  shrinkage  in  the  product  of  the  ship- 
yards indicated  that  six,  years  before  the  first  shot  was  fired  at 
Fort  Sumter,  grave  discouragement  and  disaster  had  befallen 
our  merchant  marine.  This  historic  fact  is  exceedingly  important 
to  remember,  because  it  has  so  often  been  asserted  that  the  loss 
of  our  ocean  shipping  began  with  and  was  wholly  due  to  the 
great  war  between  North  and  South.  The  records  of  shipbuild- 
ing afford  conclusive  proof  that  the  decline  had  set  in  long  be- 
forehand. 

The  causes  of  this  decline  were  in  part  economic,  but  in  much 
larger  part  political.  It  has  often  been  alleged  or  assumed  that 
the  change  from  sail  to  steam  and  from  wood  to  iron  gave  Great 
Britain,  our  old  and  formidable  rival,  an  overwhelming  advan- 
tage over  the  United  States.  But  the  United  States  in  1855  had 
long  been  building  steamships  for  coastwise  navigation ;  some  of 
these  were  iron  ships,  and  American-made  iron  was  declared  by 
architects  and  engineers  to  be  the  very  best  for  maritime  con- 
struction. There  were  iron  shipbuilding  plants  at  New  York  and 
Philadelphia  and,  before  1860,  at  Boston.  It  was  a  period  of 
low  tariff  for  revenue  only,  and  the  high  customs  and  internal 
revenue  taxation  of  the  Civil  War,  that  undoubtedly  for  a  time 
did  burden  the  shipbuilding  industry,  had  not  come  into  exist- 


AMERICAN   MERCHANT   MARINE  15 

ence.  Americans  were  naturally  as  adept  at  iron  working  and  at 
boiler  and  engine  building  as  their  British  kinsmen — a  fact  soon 
to  be  demonstrated  to  all  the  world  by  the  great  armorclad  fleet 
of  the  federal  navy. 

Great  Britain,  in  1855,  was  manufacturing  more  iron  than  the 
United  States,  arid  to  a  certain  degree  the  transition,  from  a 
material  of  which  the  United  Kingdom  produced  almost  none  at 
all  to  a  material  which  it  possessed  in  particular  abundance,  was 
a  benefit  to  British  yards,  but  it  was  by  no  means  a  conclusive 
factor.  There  was  enough  iron  of  admirable  quality  in  America 
for  the  construction  of  great  fleets  of  ships.  For  the  main  cause 
of  the  decline  of  our  ocean  shipping  from  its  climax  of  1855  to 
the  outbreak  of  the  Civil  War  it  is  necessary  to  look  in  quite  a 
different  direction. 

Americans  Ahead  in  Steamships 

Rivalry  between  American  and  British  ocean  steamship  lines 
on  the  North  Atlantic  from  1850  to  1855  had  demonstrated  that 
the  Yankees  were  as  skilful  in  engineering  as  they  had  long 
been  in  seamanship.  Captain  McKinnon,  of  the  British  navy," 
after  voyages  of  observation  in  both  the  Collins  and  Cunard 
liners,  reported  to  his  government  that  "there  are  no  ocean 
steamers  in  England  comparable  with  the  (American)  Baltic." 

But  there  was  one  serious  weakness  in  the  situation.  All  of 
the  new  American  ocean  steamers  were  built  in  the  North,  owned 
and  manned  by  Northern  men,  and  registered  at  Northern  sea- 
ports. The  sectional  slavery  feud  between  the  states  was  grow- 
ing more  and  more  bitter  every  day,  and  Southern  men  were  in 
control  in  Washington.  These  ocean  steamships,  maintained  by 
subsidy  from  the  national  treasury  against  their  equally  subsi- 
dized British  rivals,  were  a  formidable  addition  to  the  commer- 
cial and  naval  power  of  the  North.  For  the  same  reasons  why 
the  strengthening  of  the  federal  navy  was  suspended,  the  mail 
subsidies  were  taken  away  from  the  great,  successful  AmericcTn 
ocean  steamship  services  in  the  very  crisis  of  their  contest  with 
their  British  competitors. 

Our  Shipping  the  Victim  of  Sectional  Attack 

This  was  done,  after  a  memorable  struggle,  in  1856  and  1858, 
under  the  direction  of  several  distinguished  Southern  men,  Jeffer- 
son Davis,  of  Mississippi,  afterward  President  of  the  Confeder- 


16  SELECTED   ARTICLES 

acy;  R.  M.  T.  Hunter,  of  Virginia,  afterward  Confederate  Sec- 
retary of  State ;  S.  R.  Mallory,  of  Florida,  Confederate  Secretary 
of  the  Navy;  Robert  Toombs,  of  Georgia,  a  leading  member  of 
the  Confederate  Congress  and  Secretary  of  State;  Judah  P.  Ben- 
jamin, of  Louisiana,  Confederate  Attorney  General,  and  J.  M. 
Mason,  of  Virginia,  well  remembered  with  Mr.  Slidell  as  Con- 
federate envoy  to  Europe. 

These  able  and  eminent  southern  statesmen  doubtless  believed 
that  they  were  serving  vital  interests  of  their  own  people,  but  not 
all  of  their  own  section  coincided  in  their  action.  Though  they 
received  some  help  from  agricultural  states  of  the  West  and 
Southwest,  Senator  Bayard,  of  Delaware,  eloquently  protested 
against  the  abandonment  of  American  steamship  enterprise  as  a 
surrender  to  the  British  government,  and  the  action  of  Congress 
in  withdrawing  the  subsidies  was  generally  condemned  by  men 
of  all  parties  in  the  North  as  blindly  sectional  and  disastrous. 

How  British  Subsidies  Won 

Disastrous,  indeed,  it  quickly  proved.  When,  in  1856,  the 
southern  lawmakers  reduced  the  Collins  mail  pay  from  $858,000 
to  $385,000 — the  British  Cunard  ships  were  then  receiving  $856,000 
— the  managers  of  the  chief  American  line  to  Europe  refused  to 
give  up  the  fight,  and  struggled  on  for  a  time.  But  the  odds 
were  hopeless,  and  they  were  forced  to  quit  the  field.  Their 
largest  ship,  the  splendid  Adriatic,  was  sold  to  a  new  British 
subsidized  line  from  Galway  and  held  the  Atlantic  record  under 
the  British  flag.  One  by  one  the  other  American  Atlantic  lines 
succumbed,  and  when  Commodore  Vanderbilt,  with  all  his 
wealth  and  genius,  attempted  to  compete  with  the  British  sub- 
sidized lines,  he  was  unable  to  withstand  the  treasury  of  the 
British  government.  When  the  Civil  War  opened  in  1861,  only 
occasional  American  steamships  were  running  to  Europe.  British 
subsidies  had  won  the  fight. 

The  Collins  Company  had  lost  two  steamships  by  wreck,  and 
its  failure  is  sometimes  attributed  to  this  misfortune.  But  many 
more  ships  were  lost  by  the  British  Atlantic  lines.  The  Royal 
Mail  had  seven  steamers  destroyed  in  quick  succession.  But  the 
British  government,  instead  of  abandoning  the  Royal  Mail,  stood 
by  it  more  resolutely  than  before,  and  enabled  it  to  build  new 
ships  and  maintain  its  service. 

Perhaps  the  greatest  New  York  merchant  and  ship-owner  of 


AMERICAN    MERCHANT   MARINE  17 

this  time  was  A.  A.  Low,  Esq.,  the  distinguished  father  of  Hon. 
Seth  Low,  formerly  Mayor  of  New  York  and  President  of 
Columbia  University,  and  now  President  of  the  New  York  Cham- 
ber of  Commerce.  The  elder  Low,  in  a  formal  statement  to 
Congress,  speaking  as  an  eye  witness  thoroughly  familiar  with 
the  facts,  declared: 

I  only  know  the  English  have  always,  in  peace  and  war,  manifested 
a  determination  to  hold  the  supremacy  on  the  ocean,  and  the  supremacy 
which  they  acquired  by  arms  in  war  they  have  in,  peace  acquired  by  sub- 
sidies. They  have  deliberately  and  intentionally  driven  the  Americans 
from  the  ocean  by  paying  subsidies  which  they  knew  our  Congress  would 
not  pay.  .  .  .  They  have  driven  us  from  the  ocean  by  that  policy  just 
as  effectually  as  they  ever  did  drive  an  enemy  from  the  ocean  by  their 
guns. 

Great  Britain,  in  1860-1861,  was  expending  $4,537,223  in  the 
encouragement  of  steamship  building  and  mail  communication 
with  all  parts  of  the  world.  France,  following  the  British  exam- 
ple, in  1858  offered  subsidies  of  $620,000  a  year  for  a  line  from 
Havre  to  New  York,  $940,000  for  a  service  to  Brazil  and 
$1,300,000  for  a  service  to  the  West  Indies  and  Mexico.  Ger- 
many, at  about  the  same  time,  began  to  subsidize  the  North  Ger- 
man Lloyd  on  the  routes  from  which  the  swift  American  ships 
had  disappeared.  The  slavery  feud  had  killed  the  American 
merchant  marine  in  trans-Atlantic  commerce. 

Effects  of  the  Civil  War 

After  the  destruction  of  our  trans-Atlantic  mail  lines  came 
the  Civil  War.  Anglo-Confederate  cruisers  between  1861  and 
1865  burned  or  sank  110,000  tons  of  American  shipping,  and 
drove  751,595  tons  under  foreign  colors — nearly  one-third  of  our 
whole  fleet  registered  for  overseas  carrying.  This  ocean  trade 
fleet,  which  had  amounted  to  2,496,894  tons  in  1861,  controlling 
65.2  per  cent  of  our  imports  and  exports,  had  shrunk  to  1,387,756 
tons  in  1866,  controlling  only  32.2  per  cent  of  our  imports  and 
exports. 

For  a  while  after  the  war  our  ocean  shipping  actually  in- 
creased. Ship-owners  and  builders  would  not  surrender  without 
another  effort.  Our  registered  tonnage  in  1867  reached  1,515,648 
and  remained  at  or  near  the  same  figures  for  a  decade  thereafter 
— the  total  registered  tonnage  in  1878  was  1,589,348.  But  in  this 
same  period  the  proportion  of  our  imports  and  exports  carried 
in  American  vessels  had  steadily  decreased  from  33.9  to  26.3  per 


i8  SELECTED   ARTICLES 

cent,  and  after  1878  both  total  tonnage  and  proportionate  carry- 
ing fell  together,  reaching  a  tonnage  minimum  of  726,213  in  1898, 
and  a  proportionate  carrying  minimum  of  8.2  per  cent  in  1901. 
From  1898  onward  there  has  been  a  gradual,  though  not  constant, 
increase  in  our  registered  tonnage  to  the  1,066,288  tons  of  1914. 
But  this  increase  is  more  apparent  than  real,  for  it  includes  a 
considerable  fleet  of  vessels  employed  in  the  long  voyage  coast 
trades  like  that  via  the  Panama  Canal.  These  vessels  and  others 
passing  near  or  by  foreign  ports  sail  under  register  instead  of  en- 
rollment, for  purposes  of  safety  and  convenience.  There  was 
virtually  no  real  increase,  up  to  the  opening  of  the  present  Euro- 
pean war,  in  the  proportion  of  our  imports  and  exports  carried 
under  the  American  flag.  From  8.2  per  cent  in  1901  this  rose  to 
12.1  in  1905,  but  fell  again  to  8.6  per  cent  in  1914.  The  develop- 
ment of  American  ocean  shipping  when  this  great  war  started 
was  substantially  where  it  had  been  sixteen  years  before. 

The  Ocean  Mail  Law  of  i8gi 

From  1865  to  the  present  time,  Congress  has  refused  to  adopt 
any  vigorous  and  comprehensive  measure  for  the  relief  of  Ameri- 
can shipping  in  overseas  commerce,  though  a  cautious,  and  as  it 
proved  inadequate,  mail  subsidy  system  was  established  in  the 
Ocean  Mail  Act  of  March  3,  1891.  As  passed  by  the  Senate  this 
provided  both  subsidies  for  postal  lines  and  bounties  for  cargo 
vessels,  but  the  bounty  feature  was  rejected  and  the  proposed  mail 
rates  were  heavily  reduced  by  Middle  Western  insistence  in  the 
House  of  Representatives.  The  legislation  was  so  crippled  that 
its  authors  despaired  of  any  definite  results,  but  even  with  its 
lowered  compensation  the  Act  of  1891  has  proved  to  be  of  sub- 
stantial value  to  the  American  merchant  marine. 

It  was  this  legislation  which  made  it  possible  for  the  Interna- 
tional Navigation  Company  to  undertake  in  1895-1896  a  weekly 
service  in  American  steamships  from  New  York  to  England  and 
France,  the  New  York  and  Philadelphia  being  specially  admitted 
to  American  registry  for  this  purpose,  while  the  St.  Louis  and 
St.  Paul  were  built  in  the  Cramp  shipyard  in  Philadelphia.  These 
four  swift  ships  were  of  great  value  as  auxiliary  cruisers  in  the 
Spanish  War.  Though  the  company  controlling  these  steamers 
has  several  times  signified  its  willingness  to  build  new  ships  equal 
to  the  best  on  the  Atlantic  if  the  United  States  government  would 
enter  into  an  agreement  equivalent  to  that  of  Great  Britain  with 


AMERICAN    MERCHANT   MARINE  19 

« 

the  Cunard  Company,  no  action  has  been  had,  but  the  weekly 
mail  service  to  Europe  is  maintained  with  great  regularity  by  the 
existing  steamers,  and  this  has  been  of  much  advantage  to  our 
government  and  our  merchants  throughout  the  present  war. 

The  Ocean  Mail  Act  of  1891  maintains  also  the  Ward  line 
of  American  steamers  from  New  York  to  Cuba  and  Mexico,  the 
Red  D  line  from  New  York  to  Venezuela  and  the  Oceanic  line 
from  San  Francisco  to  Australasia.  Total  expenditures  under 
this  act  in  the  fiscal  year  1914  were  $1,089,361,  of  which  $673,998 
was  received  by  the  American  trans-Atlantic  service.  Every 
great  maritime  nation  spends  much  more  for  mail  subsidies  than 
our  own — even  Canada  two  or  three  times  as  much  annually. 

The  Merchant  Marine  Commission  of  1904-1903 

Congress,  in  1904,  authorized  a  Merchant  Marine  Commission 
of  five  senators  and  five  representatives,  of  which  Senator  Gal- 
linger,  of  New  Hampshire,  was  chairman,  to  make  a  new  and 
thorough  investigation  of  the  ocean  shipping  question.  This  com- 
mission published  its  report  in  1904-1905,  recommending  national 
encouragement  to  regular  steamship  services  to  the  West  Indies. 
South  America,  South  Africa,  Australasia  and  the  Orient,  and 
the  granting  of  tonnage  subsidies  to  cargo  vessels.  A  bill  carry- 
ing these  provisions  passed  the  Senate,  but  the  subsidy  to  cargo 
ships  was  eliminated  in  the  House  and  the  mail  subsidy  measure 
which  the  House  passed  was  defeated  by  a  filibuster  in  the  Sen- 
ate, conducted  by  two  Senators  who  were  retiring  to  private  life. 
The  Senate  subsequently  passed  the  ocean  mail  bill,  but  it  was 
twice  defeated  in  the  House,  though  by  the  narrowest  of  ma- 
jorities. 

In  the  Congressional  contests  over  the  measures  recommended 
by  the  Merchant  Marine  Commission,  most  of  the  opposition 
came  from  the  South  and  Middle  West — thus  repeating  the  ex- 
perience which  had  destroyed  the  American  steamship  services 
on  the  North  Atlantic  before  the  Civil  War.  But  from  both 
South  and  West  there  appeared  also  strong  advocacy  of  a  for- 
ward policy  by  individual  senators  and  representatives,  and  the 
ocean  mail  bills  were  actually  defeated  in  the  House  by  the  de- 
fection of  a  group  of  Middle  Western  Republicans  who,  though 
strong  partisans  of  tariff  protection  for  the  agricultural  interests 
of  their  states  and  section,  were  unwilling  that  national  encour- 
agement of  any  kind  should  be  extended  to  the  ocean  shipping 


20  SELECTED   ARTICLES 

industry  of  the  Atlantic  and  Pacific  seaboards.  Another  influence 
was  the  hostility  of  certain  powerful  European  steamship  cor- 
porations which  had  become  strongly  entrenched  in  American 
ocean  carrying.  From  their  headquarters  in  Europe  and  New 
York  these  foreign  steamship  organizations  sent  out  earnest  argu- 
ments against  the  subsidizing  of  American  steamship  services, 
and  these  appeals  undoubtedly  counted  for  a  great  deal  with  some 
public  men  and  people  of  European  birth  or  immediate  descent 
in  this  country,  to  whom  they  were  particularly  addressed. 

A  Free  Ship  Experiment 

As  a  part  of  the  Panama  Canal  Act  of  August  24,  1912,  Con- 
gress changed  the  traditional  policy  of  the  United  States  by  offer- 
ing free  registry  for  the  overseas  trade  to  American-owned,  for- 
eign-built vessels  not  more  than  five  years  old.  This  "free  ship" 
experiment  proved  absolutely  fruitless  up  to  the  outbreak  of  the 
war  in  Europe — not  one  foreign-built  ship  was  at  any  time  regis- 
tered under  its  provisions.  The  reason  assigned  was  the  higher 
cost  of  operation  that  would  have  to  be  assumed  under  American 
laws  and  colors. 

As  an  emergency  measure  Congress,  on  August  18,  1914, 
passed  an  act  amending  the  previous  act  so  that  there  could  be 
admitted  to  American  registry  for  purposes  of  foreign  com- 
merce American-owned,  foreign-built  vessels  without  regard  to 
age.  At  the  same  time  the  President  was  authorized  to  suspend 
the  requirement  of  law  that  the  officers  of  these  foreign-built 
ships  should  be  American  citizens,  and  to  exempt  the  ships  in 
question  from  compliance  with  our  inspection  and  measurement 
laws  and  regulations. 

A  considerable  movement  of  American  owners  of  foreign- 
built  ships  to  naturalize  their  vessels  under  the  new  law  quickly 
followed.  The  United  Fruit  Company,  the  Standard  Oil  Com- 
pany and  the  United  States  Steel  Corporation  were  the  principal 
factors  to  take  advantage  of  the  new  legislation.  Most  of  the 
foreign-built  ships  added  to  the  American  overseas  fleet  under 
the  new  policy  were  American-owned  before  the  war  began. 
There  have  not  been  many  new  purchases  of  foreign-built  ships, 
and  a  very  large  proportion  of  vessels  controlled  by  American 
capital,  notably  in  the  regular  trans-Atlantic  trade,  still  remain 
under  foreign  colors.  The  total  number  of  ships  naturalized 
under  the  Act  of  August  18,  1914,  is  171  of  a  total  tonnage  of 
583,733.  Most  of  these  were  brought  in  in  the  early  part  of  the 


AMERICAN   MERCHANT   MARINE  21 

war.  Only  three  vessels,  one  of  them  a  small  yacht,  were  granted 
registry  in  the  entire  month  of  September,  1915,  and  only  three 
more  were  admitted  up  to  December  18,  1915. 

Foreign  Crews  Demand  American  Wages 

It  has  been  discovered  in  actual  experience  that  the  suspen- 
sion of  the  navigation  laws  by  the  President,  so  that  the  foreign- 
built  ships  admitted  to  American  registry  can  come  in  with  their 
foreign  officers  and  remain  exempt  from  our  inspection  and 
measurement  laws  and  rules,  has  not  prevented  these  foreign  offi- 
cers and  their  foreign  crews  from  demanding  the  wage  scale  and 
food  scale  of  Americans.  The  result  has  been  an  immediate  and 
large  increase  in  the  cost  of  manning  and  maintenance,  so  that 
in  these  regards  the  naturalized  ships  are  on  the  same  basis  com- 
pared with  foreign-registered  ships  as  are  American  ships  of 
native  construction.  For  example,  W.  R.  Grace  &  Company  find 
that  wages  and  food  of  a  steamship  under  the  American  flag 
amount  to  $2,773  a  month  as  compared  with  $1,991  under  the 
British  flag.  "On  British  steamers  which  we  recently  trans- 
ferred to  the  American  flag,"  says  this  firm,  "the  foreign  crews 
struck  for  American  wages  the  day  of  transfer  and  received 
them." 

The  United  States  Steel  Products  Company,  which  handles 
the  export  trade  of  the  United  States  Steel  Corporation,  has  nine 
steamers  transferred  from  British  to  American  registry.  The 
373  members  of  these  nine  crews  under  British  registry  received 
in  wages  $12,478  a  month.  The  393  members  of  these  nine  crews 
under  American  registry  receive  $i 7,537  a  month — an  increase  of 
40.54  per  cent,  and  in  addition  there  has  been  an  increase  of  19 
per  cent  in  the  cost  of  food. 

The  steamship  Brindilla,  of  the  Standard  Oil  Company,  has  a 
total  wage  bill  under  the  American  flag  of  $1,765  a  month,  as 
compared  with  $936.10  a  month  when  this  same  ship  was  the 
German  steamer  Washington. 

These  great  corporations  have  precise  systems  of  record,  and 
so  these  comparative  figures  are  available  and  trustworthy,  but 
theirs  has  doubtless  been  the  experience  of  all  owners  of  foreign- 
built  steamships  W7ho  have  secured  American  registry.  The  great 
war  has  introduced  new  complications.  Because  of  war  risks 
wages  of  seamen  have  risen  under  foreign  flags,  but  there  is 
every  reason  to  believe  that  when  the  war  has  ended  the  normal 
difference  in  wages  between  American  and  foreign  ships  will  be 


22  SELECTED  ARTICLES 

substantially  what  it  was  before  the  war  began.     This  difference 
on  typical  cargo  carrying  ships  was  as  follows: 

Comparative   Wages,  1914,  on  American  and  British   Cargo 
Steamers  of  a  Capacity  of  About  5,000  Tons 

American  British 

Wages  per  month  Wages  per  month 

Master    $175  $100.00 

First  officer   90  63. 18 

Second  officer   70  43-74 

Third  officer    60  

Carpenter   40  3 1.59 

Boatswain     35  29.16 

Quartermasters  (2) 35  .... 

Sailors   (5)    30  (9)     24.30 

Chief  engineer    150  97-20 

First  assistant  engineer 100  68.04 

Second  assistant  engineer 90  48.60 

Third   assistant  engineer 80  .... 

Oilers    (3)    40  

Donkey  men   (2) 40  (i)     31.59 

Firemen   (4)    35  (6)     29.16 

Coal  passers    (2) 30  .... 

Steward    60  38.88 

Cook    45  34.02 

Mess  man    20  1 5.00 

Cabin   boy    20  

Total  American  crew,  32  men.  Total  British  crew,  27  men. 

Total  American  payroll  per                   Total    British  payroll  per 

month    $1,655       month $994.66 

What  Should  Now  Be  Done? 

Assuming  that  the  free  registry  law  of  August  18,  1914,  has 
the  effect  of  equalizing  the  first  cost  of  ships — for  American 
ship-owners  can  now  go  to  Europe  or  Japan  for  vessels  for  over- 
seas commerce  if  such  ships  can  be  procured  there  at  a  lower 
price  than  from  American  yards — there*  manifestly  still  remains, 
in  spite  of  the  suspension  of  our  navigation  laws,  a  wide  differ- 
ence in  wages  and  maintenance.  Of  the  two  factors  in  the 
problem  the  construction  cost  has  been  equalized,  but  not  the  cost 
of  operation.  This  is  still  as  heavily  against  our  flag  as  ever — and 
this  is  now  a  matter  of  demonstrated  fact — it  has  been  wholly 
removed  from  the  field  of  dispute  and  speculation. 

How  is  this  factor  of  the  higher  cost  of  operation  to  be  met? 

The  Special  Committee  on  Merchant  Marine  of  the  Boston 
Chamber  of  Commerce,  in  a  report  presented  June  7,  1915,  and 
subsequently  approved  by  the  directors  of  the  Chamber,  recom- 


AMERICAN    MERCHANT   MARINE  23 

mended  that  carefully  guarded  subsidies  be  granted  by  the  gov- 
ernment, sufficient  to  offset  the  difference  in  cost  of  operation 
between  American  and  foreign  vessels,  with  the  condition  that  all 
vessels  receiving  subsidies  should  be  so  constructed  as  to  render 
efficient  service  as  transports,  fuel  ships,  supply  ships,  ammuni- 
tion ships,  etc.,  in  case  of  war,  and  be  held  subject  to  the  call 
of  the  government. 

This  plan  would  equalize  conditions  so  far  as  typical  cargo 
vessels  are  concerned.  But  all  maritime  nations  assist  regular 
steamship  services  carrying  mail,  freight  and  passengers  on  fixed 
schedules  at  more  than  ordinary  speed,  by  means  of  mail  or  naval 
subsidies,  amounting  in  the  aggregate  to  not  much  less  than 
$50,000,000  a  year.  It  is  obvious  that  such  regular  line  steam- 
ship services  under  the  American  flag  would  require  special  addi- 
tional encouragement,  and  for  this  purpose  the  committee,  in  its 
report,  recommended  an  amendment  suitably  increasing  the  rates 
of  compensation  offered  under  the  Ocean  Mail  law  of  1891. 

The  committee  also  opposed  the  proposal  of  government  own- 
ership and  operation  of  commercial  steamships,  for  reasons 
stated  in  a  separate  report,  and  approved  the  creation  of  a  fed- 
eral shipping  board,  after  the  example  of  the  British  Board  of 
Trade,  and  a  revision  of  our  navigation  laws  and  regulations,  so 
far  as  they  unnecessarily  increase  the  cost  of  operation  of  Ameri- 
can as  against  foreign  vessels.  Such  a  revision  is  an  essential 
part  of  any  movement  for  the  revival  of  American  ocean  ship- 
ping, but,  as  has  already  been  demonstrated  by  experience  under 
the  free  registry  act  of  August  18,  1914,  a  revision  or  a  suspen- 
sion of  the  laws  and  regulations  will  not  of  itself  equalize  the 
cost  of  manning  and  maintaining  American  and  foreign  vessels. 

Shipbuilding  All-Important 

At  present,  because  of  the  great  European  War,  its  abnormal 
effect  upon  wages  and  materials  and  the  absorption  of  foreign 
shipyards  in  naval  repair  and  construction,  the  first  cost  of  com- 
mercial steamships  is  believed  to  have  risen  in  Europe  to  or  near 
a  parity  with  the  cost  in  the  United  States.  American  ocean 
shipyards  are  now  fully  employed  upon  new  tonnage,  nearly  all 
of  it  designed  primarily  for  coastwise  commerce,  but  a  large  part 
of  it  of  a  type  adaptable  also  to  overseas  carrying,  if  conditions 
in  that  trade  can  be  properly  equalized.  This  is  a  fortunate  cir- 
cumstance for  the  country.  Full  employment  will  greatly  assist 
American  ocean  yards  to  extend  their  experience,  standardize 


24  SELECTED   ARTICLES 

their  output  and  reduce  their  costs,  and  the  price  of  commercial 
steamers  of  American  construction  should  be  very  much  nearer 
the  foreign  price  after  the  war  has  ended  than  it  ever  has  been 
before.  It  should  be  understood  that  steel  plates  and  shapes  for 
shipbuilding  are  normally  obtainable  at  as  low  a  cost  in  the  United 
States  as  jn  Europe. 

The  importance  of  judicious  encouragement  of  the  art  of 
ocean  shipbuilding  cannot  well  be  overestimated,  both  because  of 
the  imperative  need  of  well-equipped  shipyards  in  the  problem 
of  national  defence,  and  because  history  affords  no  example  of 
a  nation  permanently  great  in  ship-owning  and  navigation  which 
depended  for  the  construction  of  its  ships  upon  its  rivals  in  trade 
and  possible  enemies  in  war.  It  is  still  eminently  true  in  prin- 
ciple, as  Thomas  Jefferson  declared  more  than  a  century  ago, 
that  "For  a  navigating  people  to  purchase  its  marine  afloat  would 
be  a  strange  speculation.  .  .  .  Placing,  as  a  reserve,  with  a  for- 
eign nation  or  in  a  foreign  shipyard,  the  carpenters,  blacksmiths, 
calkers,  sailmakers  and  the  vessels  of  a  nation,  would  be  a  singu- 
lar commercial  combination.  We  must,  therefore,  build  them 
for  ourselves." 

American  Marine  Insurance 

One  essential  of  complete  success  in  American  shipbuilding 
and  navigation  is  a  thoroughly  American  inspection,  survey  and 
classification  service,  capable  of  performing  for  the  United  States 
a  work  which  Lloyd's  has  long  rendered  for  the  British  Empire. 
For  many  years  American  shipowners  and  merchants  even  in  the 
coast  and  lake  trade  have  been  largely  dependent  for  marine  in- 
surance upon  foreign  corporations.  To  realize  the  full  benefits 
of  an  independent  American  shipping  industry,  it  must  be  possible 
to  effect  adequate  insurance  in  companies  domiciled  in  the  United 
States,  preference  being  given  by  our  shipowners  and  merchants 
to  insurance  in  American  companies,  and  to  this  end  a  strong 
classification  society  must  be  at  once  established,  so  that  American 
insurance  interests  can  undertake  marine  risks  with  all  proper 
safeguards  and  necessary  information.  There  is  abundant  capital 
in  this  country,  and  abundant  technical  and  administrative  skill, 
and  they  should  be  brought  into  effective  cooperation.  There 
should  be  resources  in  American  companies  sufficient  to  provide 
at  least  $1,000,000  of  insurance  on  any  single  hull,  to  handle  the 
marine  business  now  offering,  which  is  about  three  times  the 
amount  of  insurance  at  present  available. 


AMERICAN    MERCHANT   MARINE  25 

Every  important  nation  which  has  developed  a  merchant  ma- 
rine of  its  own  has  appreciated  the  need  of  creating  at  the  same 
time  a  classification  and  insurance  system  of  its  own,  instinctively 
recognizing  the  unwisdom  of  depending  for  such  an  indispensable 
service  upon  the  resources  of  foreign  competitors.  It  is  earnestly 
believed  by  many  American  shipowners  that  the  decline  of  our 
own  mercantile  marine  was  hastened  by  certain  arbitrary  dis- 
criminations of  powerful  marine  insurance  authorities  of  Europe, 
and  it  is  the  manifest  course  of  prudence  to  make  such  discrim- 
inations impossible  hereafter  by  providing  requisite  American 
standards  of  construction  properly  adapted  to  meet  the  particular 
needs  of  the  widely  varying  types  of  ships  required  for  American 
domestic  and  foreign  commerce.  Private  capital  and  enterprise 
can  best  supply  this  need,  with  due  recognition  in  the  laws  and 
regulations  of  the  government. 

A  Fleet  Essential  for  Commerce  and  Defence 

The  merchant  marine — the  building  and  operation  of  overseas 
commercial  carriers — is,  or  should  be,  a  great  national  industry, 
as  deserving  as  any  other  great  industry  of  the  friendly  interest 
of  the  American  people  and  the  intelligent  consideration  of  their 
government.  '  Just  as  every  adequate  department  store,  for  its 
own  self-protection,  insists  upon  its  own  delivery  service,  so 
every  mercantile  nation  demands  a  suitable  fleet  of  its  own  ships. 
Great  Britain  fought  fierce  wars  with  Holland  and'TYance  pri- 
marily to  secure  its  own  sea  trade.  The  new  German  Empire, 
'when  under  Bismarck  it  first  began  to  look  abroad  for  markets, 
refused  to  depend  upon  British  ships,  but  sought  at  once  the 
creation  of  a  German  merchant  navy.  France  would  not  rely 
upon  the  fleet  of  either  Germany  or  Britain,  but  has  laboriously 
wrought  its  own  merchant  marine,  and  Japan,  the  latest  of  com- 
mercial powers,  secured  its  ships  first  and  its  trade  afterward. 
Not  one  commercial  nation — save  the  United  States — has  ever 
been  willing  to  trust  its  overseas  delivery  service  to  its  eager  and 
aggressive  competitors — the  instinct  of  self-preservation  impera- 
tively forbids. 

If  the  United  States  had  possessed,  as  it  should  normally 
have  possessed,  10,000,000  or  15,000,000  tons  of  overseas  shipping 
in  August,  1914,  at  the  outbreak  of  the  present  European  War, 
its  ocean  delivery  service  could  not  have  been  broken  down  by 
the  wholesale  diversion  of  foreign  ships  whose  first  duty  was 
owed  to  foreign  governments.  Reduced  or  disrupted  steamship 


26  SELECTED   ARTICLES 

services  and  abnormally  increased  freight  rates  have  cost  the 
American  people  uncounted  millions  of  dollars  since  the  war 
began  and  as  agriculture  still  supplies  the  major  bulk  if  not  the 
major  value  of  our  exports,  the  heaviest  loss  has  fallen  upon  the 
cotton-growing  South  and  grain-growing  West,  many  of  whose 
public  men  have  historically  been  most  blind  and  indifferent  to 
the  need  of  a  merchant  fleet  that  would  serve  "America  first." 
If  an  adequate  merchant  shipping  is  important  to  our  com- 
mercial security  it  is  absolutely  indispensable  to  our  military  and 
naval  defence.  In  the  event  of  war  between  the  United  States 
and  a  foreign  enemy  our  government  would  instantly  require 
hundreds  of  auxiliary  vessels,  scouts,  transports,  mine  layers,  fuel 
ships,  ammunition  ships,  supply  ships,  hospital  ships  —  which  could 
be  provided  only  from  the  merchant  service.  Many  of  these  can 
be  procured  from  the  coastwise  fleet  but  not  enough,  for  a  large 
part  of  this  domestic  tonnage  is  not  adapted  to  open-ocean  voy- 
aging. The  country  has  not  yet  forgotten  the  humiliation  of  see- 
ing its  proud  battleship  fleet  escorted  around  the  world  by  a 
motley  crowd  of  British,  Dutch  and  Italian  colliers,  because  no 
American  vessels  were  to  be  had.  That  was  in  time  of  peace, 
but  the  lack  of  such  auxiliary  ships  and  especially  of  loyal  Ameri- 
can officers  and  men  in  war  might  fatally  cripple  our  fighting 
force  and  bring  appalling  disaster  to  the  nation.  A  strong  mer- 
cantile marine  is  one  of  the  great  essential  elements  of  American 
"preparedness." 

Merchant  Tonnage  of  Principal  Nations  as  Recorded  in  Lloyd's 
Register  for  1895  and  also  for 


1895  1915 

Tons  Tons 

Great   Britain    ..............................      13,242,639  21,045,049 

United    States    .............................       2*164,753  1  5,368,194 

Austria    ....................................           304,970  1,055,719 

Denmark   ...................................           356,714  820,181 

Holland    ....................................          446,861  1,496,455 

France    .....................................        1,094,752  2,319,438 

Germany    ...................................        1,886,812  5,459,296 

Italy    .......................................           778,94»  1,668,296 

Japan     .....................................           301,101  1,708,386 

Norway    ....................................        1,659,012  2,504,7" 

Russia    .....................................           487,681  1,053,818 

Spain    ......................................           554,238  898^823 

Sweden    ....................................           497,877  1,118,086 

1  Of  this,  2,970,284  tons  were  on  the  sea  and  the  remainder  on  North- 
ern  lakes  and  rivers. 


AMERICAN    MERCHANT   MARINE  27 

American  Tonnage  and  Proportionate  Carrying  in  Foreign  Trade 
of  United  States,  1789-1914* 


Tonnage 

Proportion  of 
Exports  & 

Proportion  of 
Tonnage         Exports  & 

Registered 
for 

Imports 
Carried  in 

Registered 
for 

Imports 
Carried  in 

Year 
Ended 

Foreign 
Trade 

American 
Vessels 

Year 
Ended 

Foreign 
Trade 

American 
Vessels 

Dec.  31 

Tons 

Per  Cent 

Dec.  31 

Tons 

Per  Cent 

1789 

123,893 

23.0 

1830 

537,563 

89-9 

1790 

346,254 

40.5 

1831 

538,136 

86.5 

1791 

363,110 

55-9 

1832 

614,121 

83-1 

1792 

411,438 

64.0 

1833 

648,869 

83.8 

1793 

367,734 

79-5 

1834 

749,378 

83.0 

1794 
1795 

438,863 

88.5     Sept. 
90.0 

30,    1835 
(9  mos.) 

788,173 

84.5 

1796 

576,733 

92.0 

1836 

753,094 

84-3 

1797 

597,777 

90.0 

1837 

683,205 

82.6 

1798 

603,376 

89.0 

1838 

702,962 

84.2 

1799 

657,142 

88.5 

1839 

702,400 

84-3 

1800 

667,107 

89.0 

1840 

762,838 

82.9 

1801 

630,558 

89.0 

1841 

788,398 

83-3 

1802 

557,76o 

86.5 

1842 

832,746 

82.3 

1803 
1804 

585,910 
660,514 

84.5     June 

88.5 

30,    1843 
(9  mos.) 

856,930 

77.1 

1805 

744,224 

91.0 

1844 

900,471 

78.6 

1806 

798,507 

91.0 

1845 

904,476 

81.7 

1807 

840,163 

92.0 

1846 

943,307 

81.7 

1808 

765,252 

90.5 

1847 

1,047,454 

70,9 

1809 

906,855 

86.0 

1848 

1,168,707 

77-4 

1810 

981,019 

91.5 

1849 

1,258,756 

75-2 

1811 

763,607 

88.0 

1850 

[,439,694 

72.5 

1812 

758,636 

82.5 

1851 

[,544,663 

72.7 

1813 

672,700 

68.0 

1852 

[,705,650 

70-5 

1814 

674,633 

54-5 

1853 

1,910,471 

69.5 

1815 

824,295 

74-o 

1854 

2,151,918 

70-5 

1816 

800,760 

70-5 

1855 

2,348,358 

75-6 

1817 

804,851 

76.5 

1856 

2,302,190 

75-2 

1818 

589,944 

82.5 

1857 

2,268,196 

70-5 

1819 

581,230 

84.5 

1858 

2,301,148 

73-7 

1820 

583,657 

89.5 

1859 

2,321,674 

66.9 

1821 

593,825 

88.7 

1860 

2,379,396 

66.5 

1822 

582,701 

88.4 

1861 

2,496,894 

65-2 

1823 

600,003 

89.9 

1862 

2,173,537 

50.0 

1824 

636,807 

91.2 

1863 

1,926,886 

41.4 

1825 

665,409 

92.3 

1864 

1,486,749 

27-5 

1826 

696,221 

92.5 

1865 

1,518,350 

27.7 

1827 

701,517 

90.9 

1866 

1,387,756 

32.2 

1828 

757,998 

88.9 

1867 

1,515,648 

33-9 

1829 

592,859 

89.5 

1868 

1,487,246 

35-1 

*  Figures    taken    from    the    report    of    the    Bureau    of    Navigation    and 
Bureau  of  Foreign  and  Domestic  Commerce  of  Department   of  Commerce. 


28 


SELECTED   ARTICLES 


Tonnage 
Registered 
for 

Proportion  of 
Exports  & 
Imports 
Carried  in 

9  months  Foreign 
Ended         Trade 

American 
Vessels 

June  30        Tons 

Per  Cent 

1869           1,496,220 

33-t 

1870 

,448,846 

35-6 

1871 

,363,652 

3i-9 

1872 

,359,040 

29.2 

1873 

,378,533 

26.4 

1874 

,389,815 

27.2 

1875 

,515,598 

26.1 

1876 

,553,705 

27.7 

1877 

,570,600 

26.9 

1878 

,589,348 

26.3 

1879 

,451,506 

23.0 

1880 

,314,402 

17.4 

1881 

,297,035 

16.5 

1882 

,259,492 

15-8 

1883 

,269,681 

16.0 

1884           1,276,972 

17.3 

1885          1,262,814 

J5-3 

1886          1,088,041 

15-5 

1887             989,412 

14-3 

i838             919,302 

14.0 

1889             999,619 

U-3 

1890             928,062 

12.9 

1891             988,719 

12.5 

1892             977,624 

12.3 

9  months 
Ended 

June  30 

1893 
( i  year) 

1894 

1895 

1896 

1897 

1898 

1899 

1900 

1901 

1902 

1903 

1904 

1905 

1906 

1907 

1908 

1909 

1910 

1911 

1912 

1913 

1914 


Proportion  of 
Tonnage        Imports  & 
Exports 
Carried  in 
American 
Vessels 


Registered 

for 

Foreign 
Trade 
Tons 


883,199 

899,698 
822,347 
829,833 
792,870 
726,213 
837,229 
816,795 
879,595 
873,235 
879,264 
888,628 
943,750 
928,466 
861,466 
930,413 
878,523 
782,517 
863,495 
923,225 
1,019,165 
1,066,288 


Per  Cent 
12.2 

13-3 
11.7 

12.0 

II.O 

9-3 
8.9 
9-3 
8.2 
8.8 
9.1 
10.3 

12. 1 

12.0 

10.6 
9.8 
9-5 
8.7 
8-7 
9-4 
8.9 
8.6 


Summary  of  Foreign  Subsidies,  Mail  Pay,  Bounties,  Etc. 

(From  Report  of  the  United  States  Commissioner  of  Navigation,   1909, 
pages  20-21.) 

Great  Britain  and  Colonies   $  9,689,384 

France   13,423,737 

Japan    5,413,700 

Italy    3,872,917 

Spain    3,150,012 

Austria-Hungary   2,984,530 

Germany     2,301,029 


Russia  .... 
Norway  . . . 
Netherlands 
Sweden  . . . 
Denmark  . . 
Belgium  ... 
Portugal  . . . 


1,878,328 

1,102,143 

880,011 

277,752 

145,000 

55,970 

50,000 


Total $45,224,5 1 3 


AMERICAN    MERCHANT   MARINE  29 

Outside  of  Europe  and  Japan,  subsidies  and  mail  payments 
have  been  reported  for  1908  by  the  Bureau  of  Navigation  as  fol- 
lows:  Chile,  $253,195;  Mexico,  $75,000;  Egypt,  $54,512;  Brazil, 
$1,300,000;  in  all,  $1,682,707,  making,  with  the  above,  a  total  of 
$46,907,220.  ! 

(In  the  fiscal  year  1914,  the  United  States  paid  in  subsidy  to 
American  steamers  under  contract  the  sum  of  $1,089,361.83,  and 
the  report  of  the  Post  Office  Department  states  that  "The  net  cost 
of  the  service  performed  was  $55,155.51  less  than  it  would  have 
been  if  the  steamers  performing  it  had  not  been  under  contract 
and  had  conveyed  the  same  mails  and  received  pay  on  a  weight 
basis.") 

The  figures  above  are  the  latest  official  enumeration  by  the 
United  States  of  foreign  steamship  subsidies,  bounties,  etc. 
These  subsidies  and  bounties  have  been  somewhat  increased 
since  1909  in  most  of  the  countries  mentioned,  together  with  a 
corresponding  increase  in  their  merchant  shipping  tonnage. 

(Germany,  in  addition  to  subsidies,  grants  preferential  rates 
on  her  State  railroads  on  cargoes  to  be  carried  in  German  ships.) 


SUMMARY  OF  PERTINENT  DATA1 

In  .a  summary  way  statistical  information  and  other  data  upon 
some  subjects  are  here  given  that  they  may  be  conveniently  ac- 
cessible for  reference.  In  obtaining  figures  which  will  remain 
accurately  significant  under  constantly  changing  conditions  of 
foreign  trade  there  is  great  difficulty. 

History  of  American  Registry 

Promotion  of  American  construction  and  ownership  of  mer- 
chant vessels  was  the  object  of  the  earliest  statutes  (in  1789  and 
1792)  in  defining  vessels  which  might  have  American  registry. 
For  registry  two  things  were  required — construction  in  the 
United -States  and  ownership  by  American  citizens.  In  order  to 
enforce  American  registry  of  American-owned  vessels  penalties 
were  provided  for  any  vessel  owned  by  an  American  but  not  ad- 
mitted to  American  registry  if  it  entered  a  port  of  the  United 
States. 

1  Chamber  of  Commerce  of  the  United  States  of  America.  Referen- 
dum No.  9.  May  8,  1915.  p.  20-7. 


30  SELECTED   ARTICLES 

In  consequence  of  wars  among  European  countries  American 
vessels  between  1792  and  1803  became  to  a  considerable  extent 
the  carriers  for  the  world's  commerce.  The  tonnage  of  American 
vessels  engaged  in  foreign  trade  gradually  increased  until  in  1861 
it  reached  2,642,000.  From  this  maximum  it  declined,  falling  to 
737,000  in  1898.  In  1910  this  tonnage  was  791,000,  and  on  June 
30,  1914,  it  was  1,066,000,  valued  at  about  $69,000,000.  The  total 
investment  of  American  citizens  in  vessels — coastwise,  on  the 
Great  Lakes,  and  in  foreign  trades — is  about  $600,000,000.  The 
tonnage  in  the  foreign  trade  was  in  1914  composed  of  720,000  tons 
in  steam  vessels,  223,000  tons  in  sailing  vessels,  and  121,000  tons 
in  barges. 

On  April  17,  1915,  the  code  list  contained  the  names  of  230 
steel  American  steamers,  propelled  by  screws,  of  over  2,000  tons 
each,  built  since  1900  in  the  United  States,  and  mostly  engaged 
in  coastwise  trade.  In  addition  there  were  63  such  steamers 
built  in  foreign  countries  since  1000,  and  admitted  to  American 
registry  under  the  law  of  August  18,  1914. 

In  connection  with  the  decrease  at  the  time  of  the  Civil  War 
in  the  proportion  of  foreign  trade  carried  by  American  vessels 
it  may  be  recalled  that  110,000  tons  of  American  vessels  were 
destroyed  by  cruisers  built  in  England,  and  so  many  other  vessels 
sought  registry  under  foreign  flags  that  it  has  been  estimated  the 
total  loss  in  the  American  marine  because  of  the  war  was  over 
1,000,000  tons. 

While  American  tonnage  engaged  in  foreign  trade  declined, 
the  number  and  capacity  of  vessels  in  the  coastwise  trade,  re- 
served exclusively  for  American  vessels,  increased,  as  follows 
(with  fishing  vessels  included)  : 

Gross  tons 

1800  301,000 

1840  1,280,000 

1880  ,. 2,715,000 

1890  3,477,000 

1900  4,338,000 

1910  6,716,000 

These  figures  include  both  steamers  and  sailing  vessels,  but 
exclude  vessels  on  the  Great  Lakes. 

Lloyd's  Register  for  1914-1915  gives  the  steam  tonnage  (of 
vessels  over  100  tons)  for  the  world  as  45,403,000  gross,  with 
the  tonnage  for  important  countries  as  follows : 


AMERICAN    MERCHANT   MARINE  31 

British    20,523,000 

(United  Kingdom  and  Colonies.) 

German    5, 1 34.000 

American    2,026,000 

(Excluding  vessels  on  Great  Lakes  but  in-  . 

eluding  coastwise  vessels.) 

Norwegian    ,957,000 

French    ,922,000 

Japanese    ,708,000 

Dutch    ,471,000 

Italian      1,430,000 

Austro-Hungarian    052,000 

Swedish   ,015,000 

In  December,  1914,  it  was  estimated  that  through  being  in- 
terned or  commandeered  for  military  purposes,  5,803,000  gross 
tons  of  the  world's  merchant  vessels  had  been  withdrawn  from 
commercial  use.  At  the  beginning  of  the  Boer  war,  1899,  there 
was  a  similar  withdrawal  of  merchant  vessels  from  commercial 
use,  and  disturbance  of  international  trade.  At  that  time  Eng- 
land commandeered  250  steamers,  of  approximately  1,000,000  tons, 
for  the  most  part  taking  them  from  the  North  Atlantic.  Freight 
rates  are  said  to  have  been  increased  by  30  per  cent  at  that  time, 
and  exports  from  the  United  States  of  grain  and  other  food- 
stuffs, cattle,  etc.,  decreased. 

During  the  year  ended  last  June,  twenty-nine  new  American 
steel  steamers,  of  1,000  tons  or  more,  were  placed  in  commission 
on  the  seaboard  after  being  constructed  in  the  United  States. 
They  had  an  aggregate  tonnage  of  133,000.  These  vessels  very 
largely  entered  the  coastwise  trade.  On  July  I  there  were  in 
course  of  construction  on  the  seaboard  24  steamers  of  a  tonnage 
of  104,000.  Between  July  I,  1914,  and  March  31,  1915,  the  ton- 
nage of  steel  steamers  completed  on  the  seaboard  was  86,000,  or 
22,000  tons  less  than  in  the  corresponding  period  of  the  year 
before.  The  private  shipyards  of  the  United  States  on  the  sea- 
board, if  devoted  wholly  to  construction  of  merchant  vessels, 
could  accommodate  at  least  200,000  tons. 

In  1826,  when  goods  carried  in  the  foreign  trade  of  the  United 
States — imports  and  exports — were  valued  at  $162,000,000,  92.5 
per  cent  were  borne  in  American  vessels.  Year  by  year  this  pro- 
portion fell  until,  in  1862,  when  the  value  of  goods  carried  in  the 
foreign  trade  was  $435,000,000,  only  50  per  cent  were  transported 
in  American  vessels.  Even  this  percentage  was  never  regained, 
since  the  proportion  carried  in  American  vessels  continuously  fell. 


32  SELECTED   ARTICLES 

In  the  year  ended  on  June  30,  1914,  when  the  value  of  American 
exports  and  imports,  by  land  and  sea,  was  $4,258,000,000  the  per- 
centage borne  in  American  vessels  had  reached  its  lowest  point, 
8.6  per  cent. 

In  February,  1915,  the  tonnage  of  steam  vessels  in  foreign 
trade  entering  American  ports  was  2,666,000  (2,872,000  tons  in 
February,  1.914),  and  the  steam  tonnage  cleared  was  2,858,000 
(2,738,000  tons  in  February,  1914).  The  sailing  tonnage  cleared 
was  123,000  (107,000  in  February,  1914). 

American  vessels  in  February,  1915,  carried  exports  valued  at 
$30,842,000  ($11,352,000  in  February,  1914)  and  foreign  vessels 
carried  exports  valued  at  $237,807,000  ($139,000,000  in  February, 
1914).  Thus,  of  exports  by  water  in  February,  1915,  American 
vessels  carried  11.5  per  cent  (7.5  per  cent  in  February,  1914).  Of 
the  imports  in  February,  1915,  American  vessels  carried 
$21,035,000  ($16,142,000  in  February,  1914)  and  foreign  vessels 
carried  $91,853,000  ($120,347,000  in  February,  1914).  Thus  of  im- 
ports by  water  American  vessels  in  February,  1915,  carried  over 
18  per  cent  (under  12  per  cent  in  February,  1914). 

The  proportions  of  the  sea-borne  foreign  trade  of  the  United 
States  carried  by  the  merchant  vessels  of  the  principal  maritime 
countries  are  indicated  below,  both  for  the  year  ended  with  June, 
1914,  and  for  the  six  months  following,  five  of  which  fell  within 
the  period  of  the  European  war. 

July-Decem- 
1913-14       her,  1914 

American    9.26  14.09 

British    53-45  5^-54 

German    13-79  3-o6 

French    4-64  4-64 

Dutch    4-io  5-90 

Norwegian     3'49  6-O3 

Japanese    2.14  2.65 

Italian    1-94  3-io 

Austrian    i-57  -23 

Belgian     1.27  -47 

Payments  made  to  citizens  of  foreign  countries  on  the  part 
of  Americans  whose  goods  are  carried  in  the  foreign  trade  of 
the  United  States  by  vessels  under  foreign  flags  have  been  esti- 
mated to  aggregate  between  $200,000,000  and  $300,000,000  a  year. 
There  have  been  further  payments  on  account  of  insurance 
written  by  foreign  companies. 


AMERICAN   MERCHANT   MARINE  33 

Discriminating  Duties 

Until  1915  the  United  States,  to  aid  American  vessels,  im- 
posed a  discriminating  duty  of  10  per  cent  upon  goods  imported 
in  vessels  of  other  countries — a  system  which  was  impaired  in  the 
treaty  with  England  which  followed  the  war  of  1812.  In  1913 
Congress  attempted  to  return  to  the  use  of  discriminating  duties, 
by  giving  to  merchandise  imported  in  American  vessels  a  reduc- 
tion of  5  per  cent  of  the  regular  duties.  In  order  to  meet  the 
situation  caused  by  treaties  which  had  followed  the  first  impair- 
ment of  the  policy  of  discriminating  duties,  the  tariff  law  of  1913 
was  made  to  contain  such  phraseology  that,  upon  the  authority  of 
an  opinion  by  the  Attorney  General  that  the  several  parts  of  the 
law  were  conflicting  and  the  whole  result  nugatory,  the  Secretary 
of  the  Treasury  has  refused  to  grant  a  rebate  upon  any  goods 
imported  in  American  vessels.  The  attitude  of  the  Secretary  has 
been  contested,  and  the  whole  question  is  now  before  the  Court 
of  Customs  Appeals,  from  the  decision  of  which  an  appeal  will 
probably  be  taken  to  the  Supreme  Court. 

Ocean  Mails 

In  1845  the  United  States  passed  its  first  law  for  ocean-mail 
subventions,  in  an  endeavor  to  meet  the  subsidies  England  had  in 
1835  granted  for  the  first  time  to  a  British  line  across  the  North 
Atlantic.  This  ocean-mail  act  of  the  United  States  ceased  its 
effect  in  a  few  years,  through  a  veto  of  the  President.  In  1891 
Congress  again  enacted  legislation  for  mail  subventions — the 
present  ocean-mail  law.  Under  this  law,  at  the  time  of  the 
Spanish-American  War  several  vessels  built  in  the  United  States 
became  available  as  naval  auxiliaries.  Ten  steamships  have,  it 
seems,  been  built  to  take  advantage  of  the  law  of  1891.  In  1895 
the  American  transatlantic  mail  line  was  equal  to  any  foreign 
service. 

In  1872,  however,  Congress  had  already  discriminated  on  be- 
half of  American  vessels  in  giving  compensation  for  carrying 
mails  by  sea,  by  providing  that  American  vessels  should  receive 
both  the  inland  and  the  sea  postage  for  the  mail  they  carry,  while 
foreign  vessels  in  like  case  should  receive  only  the  sea  postage. 
This  statute  is  still  in  force,  and  affords  the  basis  on  which  ves- 
sels are  compensated  for  carrying  mails  according  to  the  actual 
weight  transported.  The  apparent  intent  of  the  law  is  that 
American  vessels  should  receive  an  equivalent  of  all  the  postage 


34  SELECTEE!   ARTICLES 

on  the  mail  they  carry.  As  there  is  an  average  of  44  letters  to  a 
pound,  with  three  of  them  taking  excess  postage,  the  government 
in  fact  now  receives  about  $2.20  a  pound  as  total  postage  for 
letters  destined  to  countries  with  which  the  United  States  has  the 
five-cent  rate  and  could  pay  compensation  to  American  steamers 
at  this  rate.  But  computing  that  the  postage  rate  is  five  cents  an 
ounce,  the  Post  Office  Department  actually  pays  American 
steamers  as  compensation  for  mails  they  carry  only  80  cents  a 
pound.  Foreign  steamers  are  paid  about  35  cents  a  pound  (i.  e., 
at  the  rates  prescribed  by  the  International  Postal  Union — 4 
francs  per  kilogram  for  letters),  which  is  held  by  the  Post  Office 
Department  to  be  equivalent  to  "sea  postage." 

In  the  year  ended  with  June,  1914,  the  sum  paid  as  mail  sub- 
ventions under  the  law  of  1891  was  $1,089,361.  The  services  for 
which  these  subvention  payments  were  made  were: 

Transatlantic  Service   (International  Mercantile  Marine) $673,998 

San  Francisco  to  Sydney,  Australia  (Oceanic  Line) 201,916 

Philadelphia   to  Jamaica   (American  Mail   Line) 18,269 

New  York  to  Cuba  and  Mexico  (New  York  and  Cuba  Mail  Line)  97,566 

New  York  to  Venezuela  (Red  "D"  Line) 107,612 

Routes  on  which  compensation  aggregating  $314,000,  under 
the  law  of  1872,  was  paid  to  American  vessels,  were  as.  follows : 

Transatlantic  Service  to  Belgium   (Red  Star  Line) $        758 

Seattle  to  Hongkong  via  Japan  (Great  Northern   Line) 8,870 

San   Francisco  to   Hongkong  and   Manila  via   Hawaii  and  Japan 

(Pacific  Mail  Line) 62,258 

Inward  voyage  to  San  Francisco  from  Pago  Pago  (Oceanic  Line)  1,106 

San  Francisco  to  Mexico,  etc.  (Pacific  Mail  Line) 7,220 

New  York  to  Santo  Domingo  and  Turks  Island   (Clyde  Line) . .  23,956 

New  York   to  Colon    (Panama   R.   R.    Steamship   Co.) 198,394 

New  Orleans  to  Cuba  and  Mexico  (Southern  Pacific  Line) 10,535 

New  York  to  Brazil  (U.  S.  and  Brazil  Line) 1,450 

In  the  year  ended  on  June  30,  1914,  the  total  compensation 
paid  to  foreign  vessels  for  transporting  mails  of  the  United 
States  was  $1,433,000 — divided  as  $1,113,000  for  the  transatlantic 
mails,  $80,000  for  transpacific  mails,  and  $239,000  for  mails  on  a 
variety  of  routes  (including  the  routes  to  the  east  and  the  west 
coasts  of  South  America,  to  the  West  Indies  and  Central 
America,  and  to  Canadian  ports). 

The  Post  Office  Department  has  pointed  out  that  in  the  fiscal 
year  of  1914  the  net  result  of  the  mail-subvention  law  was  that 
the  payments  by  the  United  States  by  way  of  subventions  were 


AMERICAN   MERCHANT   MARINE  35 

in  the  aggregate  less  by  $55,000  than  if  the  mails  carried  by  the 
steamers  in  question  had  been  paid  for  at  the  regular  rate  of  com- 
pensation. It  is  noticeable,  however,  that  the  compensation  on 
some  of  the  lines  would  have  been  very  much  less  than  the  sub- 
vention payment. 

Free  Materials 

As  the  change  from  wood  to  iron  and  steel  for  use  in  ship- 
building was  an  important  element  in  causing  construction  of 
vessels  abroad  to  be  cheaper  than  in  the  United  States — a  condi- 
tion which  began  to  develop  in  the  period  immediately  before  the 
Civil  War — Congress  in  1871  initiated  a  policy  of  admitting  free 
of  duty  materials  for  the  construction  of  vessels  in  the  United 
States.  Various  tariff  laws  gave  this  policy  increased  effect.  The 
Tariff  Act  of  1909  admitted  materials  free  of  duty  with  a  limita- 
tion that  a  vessel  in  which  they  were  incorporated  could  not  en- 
gage in  the  coastwise  trade  more  than  six  months  in  a  year.  The 
Panama  Canal  Act  in  1912  finally  gave  complete  effect  to  the 
policy,  by  admitting  material  free  of  duty  without  any  reserva- 
tion, and  the  Tariff  Act  of  1913  continued  the  effect  of  the  law 
of  1912. 

Free  Ships 

Connected  with  the  question  of  importation  of  ship-building 
materials  free  of  duty  has  been  the  question  of  "free  ships,"  i.  e., 
admission  of  vessels  to  American  registry  even  though  they  were 
constructed  in  foreign  countries.  In  1911  it  was  said  that  every 
nation  except  the  United  States  had  abandoned  the  requirement 
that  only  home-built  vessels  could  be  admitted  to  its  register, 
with  a  consequence  that  citizens  of  other  countries  were  free  to 
have  their  vessels  built  wherever  construction  was  cheapest.  In 
this  situation,  officials  estimated  that  American-owned  vessels 
under  foreign  flags  were  nearly  equal  in  tonnage  to  the  Ameri- 
can-registry vessels  engaged  in  the  foreign  trade,  and  in  carrying 
capacity  were  superior. 

At  the  time  the  Panama  Canal  Act  was  passed,  in  1912,  the 
United  States  departed  from  the  restriction  it  had  enforced  since 
1792,  by  permitting  foreign-built  vessels  not  more  than  five  years 
old  to  obtain  American  registry  exclusively  for  foreign  trade. 
Under  this  law  no  vessels  were  transferred  to  American  registry. 
On  August  18,  1914,  when  conditions  of  emergency  were  acute, 
the  law  was  amended  to  admit  foreign-built  vessels  regardless  of 


36  SELECTED   ARTICLES 

their  age,  and  to  authorize  the  President  in  the  case  of  such  ves- 
sels to  suspend  the  operation  of  the  law  which  necessitated  em- 
ployment of  American  officers,  etc.  Since  this  amendment  in  the 
law  became  effective,  and  the  President  made  the  suspensions  in 
question,  142  vessels  with  aggregate  gross  tonnage  of  500,705  had, 
on  May  I,  been  transferred  to  American  registry.  These  vessels 
are  valued  at  $32,000,000. 

Recent  Proposals  for  New  Legislation 

Discussion  of  new  legislation  for  the  promotion  of  the  Ameri- 
can merchant  marine  has  been  active  for  years.  Declarations  in 
political  platforms,  Presidential  messages,  and  bills  reported  from 
committee  in  Congress  have  been  numerous.  About  1000  it 
seemed  probable  that  Congress  would  by  subsidy  or  other  means 
offer  assistance,  but  in  1903  it  became  evident  there  would  be  no 
immediate  legislation.  In  1904  a  Congressional  Merchant  Marine 
Commission  was  created.  This  commission  held  hearings  through- 
out the  country  and  in  January,  1905,  made  its  report,  advocating 
the  creation  of  a  naval  reserve  for  employment  in  war  by  paying 
annual  bounties  to  men  in  the  merchant  marine  who  volunteered 
for  this  reserve,  encouragement  of  ownership  and  operation  of 
merchant  freight  vessels  by  paying  an  annual  subvention  of  $5 
per  gross  registered  ton  for  every  vessel,  steam  or  sail,  engaged 
for  twelve  months  in  the  foreign  trade,  and  encouragement  of 
fast  lines  by  enlargement  of  the  number  of  services  under  the 
mail-subvention  law  of  1891.  In  1007  and  the  years  following,  at 
least  to  1911,  bills  were  annually  reported  from  committee,  usu- 
ally proposing  extensions  of  the  ocean-mail  subvention  law  of 
1891 ;  none  of  these  bills  became  law,  however. 

In  1912,  under  a  resolution  of  the  House,  the  Committee  on 
the  Merchant  Marine  and  Fisheries  began  an  investigation  into 
steamship  agreements  and  affiliations  in  the  American  foreign 
trade,  concluding  its  proceedings  in  1914  with  a  report  in  which 
it  placed  recommendations  for  supervisory  control  of  steamship 
carriers.  The  proposals  of  the  Committee  were  expressed  in  a 
bill  (H.  R.  17286,  Sixty- Third  Congress). 

Government  Aid  in  Other  Countries 

For  each  principal  foreign  country  concerning  which  data  is 
at  hand  the  nature  of  aid  extended  to  private  lines  of  steamships 
may  be  summarized  as  follows : 


AMERICAN   MERCHANT   MARINE  37 

Austria-Hungary  has  been  making  payments  aggregating 
roughly  $5,000,000  year,  about  three-fourths  of  which  went  to 
lines  which  carried  mails.  The  services  have  been  on  the  Dan- 
ube, and  to  Dalmatia,  Black  Sea  ports,  the  Far  East, 'Africa, 
Brazil,  etc. 

Belgium  has  been  making  payments  approximating  $60,000  to 
German  lines  to  East  Asia,  Australia,  and  South  America  in  con- 
sideration of  their  stopping  at  Antwerp.  In  addition,  the  govern- 
ment under  a  law  of  1907  lent  $1,000,000  to  three  Belgian  com- 
panies with  lines  to  the  Mediterranean,  the  Levant,  and  South 
America,  taking  the  companies'  debentures  payable  in  twenty 
years  with  interest  at  3  per  cent. 

Brazil  apparently  paid  $1,500,000  in  1913  to  the  Lloyd  Brasi- 
liero  by  way  of  subvention  for  services  which  include  a  line  to 
New  York.  To  an  Italian  company  subsidies  are  paid  for  a 
freight  and  passenger  service  from  Italy. 

The  Canadian  parliament  voted  subsidies  and  mail  subven- 
tions amounting  to  $2,697,000  for  the  fiscal  year  ended  with 
March,  1915.  This  amount  was  divided  among  14  services 
on  the  Atlantic  (to  England,  France,  Australasia,  West  Indies, 
South  America,  South  Africa,  etc.),  6  services  on  the  Pacific 
(principally  to  Australasia,  Japan,  and  Hongkong),  and  46 
local  services,  which  collectively  receive,  however,  only  about 
one-tenth  of  the  total  payments.  The  contracts  between  the  gov- 
ernment and  the  steamship  lines  provide  that  Canadian  shippers 
are  to  be  preferred  in  allotment  of  cargo  space. 

The  French  government's  payments  relate  to  construction  (of 
hulls  and  machinery),  operation,  and  carriage  of  the  mails.  In 
the  summer  of  1914  France  was  proposing  to  make  some  small 
increases  in  its  total  payments,  raising  them  for  the  next  year 
to  $13,234,000  in  all,  divided  as  $3,474,000  for  construction, 
$3,570,000  for  operation  and  equipment,  $106,000  for  the  Corsican 
service,  $3,082,000  for  services  to  the  Far  East,  Australia,  east 
coast  of  Africa,  and  the  eastern  Mediterranean,  $941,000  for  lines 
to  the  West  Indies  and  Central  America,  and  $621,000  for  lines 
to  Brazil  and  the  River  Plate. 

England  has  used  a  system  of  mail  contracts  which,  because 
of  necessity  for  maintaining  communication  with  oversea  posses- 
sions, has  political  as  well  as  immediately  commercial  purposes. 
The  commercial  advantage  to  the  lines  which  have  contracts  has 
not  prevented  competing  British  lines  without  contracts  from 


38  SELECTED   ARTICLES 

succeeding.  Some  incidental  payments  have  the  effect  of  sub- 
sidy; for  example,  in  1912,  when  a  new  contract  was  made  for 
the  South  African  service,  it  was  said  that  the  yearly  payment  of 
$832,000  under  the  contract  would  be  increased  to  $2,433,000  by 
reason  of  carriage  of  gold  and  ostrich  feathers  sent  by  registered 
mail  and  through  transportation  of  government  supplies,  on 
which  the  freight  rates  were  increased  by  the  terms  of  the  con- 
tract. In  1909  the  Commissioner  of  Navigation,  of  the  United 
States,  estimated  that  on  the  principal  ocean-mail  contracts  Eng- 
land and  its  possessions,  which  divide  the  payments,  made  a 
yearly  outlay  of  $4,500,000  for  services  to  India,  China,  Australia, 
South  Africa,  Canada,  the  United  States,  the  West  Indies,  and 
South  America.  In  1909  England  and  its  possessions  (except 
Canada,  for  which  figures  are  given  above)  were  estimated  to 
have  spent  between  seven  and  eight  million  dollars  in  payments 
of  all  kinds  in  aid  of  merchant  marine. 

Concerning  the  German  government's  assistance  to  merchant 
vessels  recent  data  is  not  at  hand.  In  1908,  in  response  to  an 
inquiry,  the  German  Foreign  Office  presented  to  the  American 
ambassador  a  note  in  which  it  stated  that  the  government  made 
no  payments  to  steamships  except  in  return  for  services.  Be- 
tween 1881  and  1907,  however,  the  sum  paid  annually  for  trans- 
portation of  the  mails  increased  from  $47,000  to  $2,246,000.  These 
mail  payments  were  for  services  to  Asia  and  Australasia,  South 
Africa,  South  America,  West  Indies,  the  United  States,  etc.  In 
commenting  upon  payments  to  German  mail  lines  the  German 
government  in  1908  said  that  its  reason  for  payments  lay  in  the 
necessity  of  having  at  its  disposal  regular  shipping  connections 
for  the  public  post,  travel,  and  freight  with  certain  lands  across 
the  sea,  it  being  impossible  for  a  private  shipping  company  to 
start  such  lines  without  state  funds,  since  they  could  not  pay 
the  cost  of  operation  unaided. 

The  Italian  government,  as  subventions  for  mail  lines  and  as 
subsidies  for  construction  and  operation,  spent  $4,600,000  in  1912. 
The  mail  services  were  to  North  and  East  Africa,  Egypt,  the 
Levant,  India,  China,  Java  and  Central  America. 

Japan  in  1911  paid  to  Japanese  steamers  about  $7,000,000,  on 
account  of  construction,  operation,  and  carriage  of  the  mails. 
The  services  were  to  Europe,  North  America,  South  America, 
Australasia,  East  Indies,  India,  Chinese  ports,  Manchuria,  Korea, 
and  Siberia. 


AMERICAN   MERCHANT   MARINE  39 

Russia  has  been  making  payments,  $3,500,000  in  1912,  for  en- 
couragement of  the  Russian  marine,  and  small  payments  as 
bounties  for  ship-building,  $50,000  in  1912.  The  basis  of  the 
payments  in  the  larger  sum  is  not  wholly  clear ;  the  payments 
have  been  made,  however,  for  services  on  the  Mediterranean  and 
the  Caspian  Seas,  services  to  the  Persian  Gulf,  to  Arctic  coasts, 
and  to  Behring  sea  and  China  from  Vladivostock. 

Spain  enacted  a  law  in  1909  for  direct  bounties  to  shipping, 
both  coastwise  and  oversea,  including  payments  for  construction 
and  operation  of  mail  lines.  The  law  provided  for  yearly  pay- 
ments of  $530,000  for  general  navigation  bounties,  $386,000  for 
mail  lines  to  Brazil,  Argentina,  Havana,  New  York,  and  the 
Adriatic  and  Black  Seas,  $1,856,000  for  mail  lines  to  the  Philip- 
pines, Argentina,  New  York,  Cuba,  Mexico,  and  the  Caribbean, 
and  $375,000  for  connections  with  the  Canaries  and  Balearic 
Islands  and  Spanish  possessions  in  Africa. 

A  number  of  other  countries  have  made  payments  in  aid  of 
their  merchant  marine.  Argentina  has  adopted  legislation  for 
aid  on  account  of  both  construction  and  operation,  but  seems  to 
have  made  no  payments.  Chile  has  been  making  small  payments 
for  services  northward  along  the  West  Coast  to  Panama.  Den- 
mark, Greece,  Mexico,  Peru,  and  Norway  are  other  countries 
which  have  laws  for  aid  to  shipping. 

In  several  countries  there  has  been  government  ownership 
and  operation  of  merchant  vessels,  usually  for  some  distinct  pur- 
pose, as  in  connection  with  government  railways  or  to  afford 
special  facilities  of  transportation.  Instances  in  which  there 
has  been  government-ownership  for  oversea  lines  include  the 
following : 

The  Roumanian  Government  has  owned  and  operated  steam- 
ers on  the  Danube  and  in  two  foreign  services, — one  running 
profitably  to  Holland,  with  five  cargo  boats  for  grain,  and  one 
running  to  Egypt,  at  a  deficit  of  about  $100,000  a  year. 

The  largest  shipping  concern  in  Brazil — the  Lloyd  Brasiliero, 
with  several  services  including  a  line  to  North  America,  is 
usually  said  to  be  owned  by  its  government.  In  any  event,  this 
company  is  closely  affiliated  with  the  government  and  receives 
practically  all  subsidies  paid  to  vessels  in  the  foreign  trade  of 
Brazil. 

The  Russian  Volunteer  Fleet  is  likewise  described  as  owned 
by  its  government.  Whether  or  not  it  is  actually  the  property 


40  SELECTED   ARTICLES 

of  the  Russian  government  cannot  be  ascertained  from  informa- 
tion at  hand,  but  there  is  no  question  that  the  government  has  in 
recent  years  lent  money  to  the  Fleet  for  acquisition  of  new 
steamers,  charging  no  interest,  and  that  the  government  largely 
directs  the  operation  of  the  steamers  of  the  Fleet. 

The  United  States  in  1904  became  the  owner  of  a  majority 
of  the  shares  in  the  Panama  Railroad  Company,  subsequently 
acquiring  all.  The  government  has  through  the  War  Department 
continued  the  existence  of  the  corporation,  selecting  directors 
very  largely  among  officers  of  the  army  and  navy.  The  railroad 
company  in  turn  had  a  line  of  steamers  which  it  operated  be- 
tween the  Isthmus  and  New  York.  This  line  was  augmented  by 
vessels  chartered  to  it  by  the  government  and  used  as  a  means 
of  transporting  supplies, — notably  great  quantities  of  cement, — 
and  employees  for  the  Canal.  At  the  same  time,  it  has  offered 
to  the  public  facilities  for  passengers  and  cargo,  and  has  carried 
the  mails.  It  now  operates  four  steamers  with  weekly  sailings 
from  New  York.  Two  naval  colliers  are  under  construction,  at 
the  cost  of  the  government,  and  when  completed  in  1916  will  be 
turned  over  to  the  steamship  line  for  use  in  maintaining  supplies 
of  coal  at  the  Panama  Canal. 

The  United  States  through  the  War  Department  owns  some 
eighteen  ocean-going  vessels  of  merchant  type,  operating  them 
under  the  Quartermaster  General  for  transportation  of  troops, 
animals,  and  supplies.  Between  the  Pacific  Coast  and  the  Philip- 
pine Islands  a  regular  service  with  monthly  sailings  is  main- 
tained with  these  transport  vessels.  Recently,  the  War  Depart- 
ment has  announced  that  it  has  made  arrangements  with  the 
Philippine  government  under  which  the  service  of  transports 
may  afford  some  temporary  facilities  for  commercial  shipments. 

Since  the  war  began  members  of  the  Labor  party  have  urged 
in  the  House  of  Commons  that  the  British  government,  as  a 
means  of  reducing  ocean-freight  rates  on  foodstuffs,  either  oper- 
ate merchant  vessels  and  place  rates  on  grain  and  other  food 
materials  from  Canada  and  Argentina  on  a  basis  of  cost,  or  on 
a  somewhat  comparable  basis,  but  including  a  profit,  regulate  the 
rates  charged  under  private  operation.  The  British  government, 
speaking  by  the  President  of  the  Board  of  Trade,  opposed  both 
forms  of  the  proposal.  At  the  same  time,  the  British  govern- 
ment is  in  a  sense  in  the  position  of  operating  merchant  vessels. 
Toward  the  end  of  last  January  the  Board  of  Trade  (a  govern- 


AMERICAN   MERCHANT   MARINE  41 

ment  department,  corresponding  to  our  Department  of  Com- 
merce) arranged  that  some  thirty-four  German  and  Austrian 
merchant  ships  should  be  placed  in  the  management  of  two  men 
experienced  in  shipping.  These  vessels,  having  been  in  British 
ports  at  the  beginning  of  the  war,  are  in  the  situation  of  being 
interned  until  the  war  ends.  The  managers  were  instructed  to 
charter  the  vessels  at  market  rates,  being  careful,  however,  to 
avoid  using  them  to  advance  the  market  rate  for  charters.  These 
vessels  are  being  used  largely  in  the  coastwise  trade  for  carrying 
coal.  The  proceeds  of  the  use  of  the  vessels  are  paid  into  the 
public  treasury. 


WHAT  THE  WAR  HAS  DONE  TO  SHIPPING1 

Twenty-one  months  of  war  have  destroyed  1,216  merchant 
vessels.  They  aggregated  nearly  two  and  a  half  million  gross 
tons.  The  following  tables  show  how  the  different  shipping  na- 
tions of  the  world  have  suffered  in  this  respect : 

Allied  Shipping  Destroyed 

Nation  Gross  Tons 

Great  Britain 1,571,293 

France    190,289 

Italy 71.443 

Russia    42,258 

Belgium    25,858 

Japan   16,015 

Total  gross  tons 1,917,161 

Neutral  Shipping  Destroyed 

Nation  Gross  Tons 

Norway    147,580 

Holland  82,629 

Denmark    40,653 

Sweden    37,896 

Greece    15,017 

Spain    14,550 

United   States    10,377 


Total  gross  tons 348,702 

1  Independent.     86:257.  May  15,  1916. 


42  SELECTED  ARTICLES 

Teutonic  Shipping  Destroyed 

Nation  Gross  Tons 

Germany    165,006 

Turkey     18,150 

Austria-Hungary    13.240 

Total  gross  tons 196,396 

England  has  lost  the  most  ships,  727 ;  Norway  the  next  largest 
number,  107;  France  next,  72;  Germany  next,  68;  Denmark, 
Holland,  Italy,  Russia  and  Sweden  are  not  far  apart  in  their 
losses,  which  range  from  31  to  40.  The  United  States,  Japan 
and  Spain  stand  at  the  bottom  of  the  list,  with  6,  3,  and  7 
respectively. 

The  British  losses  are  naturally  the  greatest.  For  Great  Bri- 
tain has  the  most  ships  on  the  sea;  and  the  German  submarine 
warfare  has  been  directed  primarily  against  England.  The  Ger- 
man losses  are  naturally  light,  for  since  the  first  few  months 
of  the  war  German  shipping  has  been  tightly  locked  up  in  home 
and  neutral  harbors. 

Last  week  Earl  Curzon  announced  in  the  House  of  Lords  that 
a  total  of  450  enemy  ships  had  been  detained,  seized  or  captured 
by  the  Allies  in  all  parts  of  the  world  since  the  war  began. 

He  added  that  it  was  an  encouraging  fact  and  a  curious  co- 
incidence that  the  British  merchant  ships  lost  thru  war  opera- 
tions were  exactly  balanced  in  number  and  tonnage  by  the  new 
ships  added  to  the  register  during  the  war. 


FORMS  OF  GOVERNMENT  AID  TO  SHIPPING1 

State  aid  to  merchant  shipping  may  take  a  number  of  forms. 
In  the  commonly  accepted  version  of  the  term  government  aid 
means  the  payment  of  bounties,  subsidies,  or  subventions,  but  its 
scope  is,  in  fact,  much  broader,  since  substantial  assistance  is 
often  rendered  by  the  grant  of  privileges  whose  benefits  can  not 
be  computed  in  terms  of  money. 

In  this  report  government  aid  has  been  treated  under  two 
broad  classes,  namely,  direct  and  indirect  aid.  Under  the  head 

1  From  "Government  Aid  to  Merchant  Shipping,"  United  States  De- 
partment of  Commerce,  Bureau  of  Foreign  and  Domestic  Commerce. 
Special  Agents  Series.  No.  119. 


AMERICAN   MERCHANT   MARINE  43 

of  indirect  aid  are  considered  (a)  reservation  of  coasting  trade ; 
(b)  exemption  from  import  duties  on  shipbuilding  materials;  (c) 
preferential  railway  rates;  (d)  loans  to  shipowners;  (e)  reim- 
bursement of  canal  dues;  and  (f)  other  indirect  aid,  such  as  ex- 
emption from  port  dues,  taxation,  etc.  Under  the  head  of  direct 
aid  are  shown  (a)  bounties  or  subsidies,  divided,  as  a  rule,  into 
three  principal  classes,  namely,  construction,  general  navigation, 
and  special  navigation  bounties ;  and  (b)  subventions,  divided 
into  two  classes,  namely,  postal  and  admiralty. 

Reservation  of  Coasting  Trade 

In  the  case  of  many  of  the  selected  countries  the  extent  of  the 
coasting  trade  is  so  limited  that  its  monopolization  by  ships  flying 
the  national  flag  is  of  comparatively  little  advantage  to  such  ship- 
ping. Of  the  leading  maritime  countries  Great  Britain  is  dis- 
tinguished by  the  fact  that  the  extensive  coasting  trade  of  the 
British  Isles  and  the  so-called  imperial  coasting  trade  (the  trade 
between  the  mother  country  and  the  colonies  and  between  the 
colonies  themselves)  have  been  open  to  the  ships  of  all  nations 
since  about  1850,  when  the  navigation  acts  were  repealed.  In  re- 
cent years,  however,  consideration  has  been  given  to  a  proposal 
that  the  British  and  imperial  coasting  trade  be  closed  to  ships  of 
nations  denying  British  reciprocal  privileges  and  to  subsidized 
foreign  ships,  except  upon  payment  of  an  indemnity. 

The  coasting  trades  of  Norway  and  Sweden  are  open  to  the 
ships  of  all  other  nations  except  Sweden  and  Norway,  respec- 
tively. The  coasting  trade  of  Denmark  is  open  without  qualifi- 
cation. The  configuration  of  the  coasts  of  these  countries  and 
their  sparse  population  make  their  coasting  trades  of  little  value 
in  the  development  of  a  merchant  marine.  In  fact,  both  Norway 
and  Sweden  find  it  necessary  to  subsidize  a  number  of  coastwise 
lines  to  insure  regular  trade  and  mail  communications. 

The  coasting  trade  of  Germany,  while  not  important,  is  largely 
held  by  German  ships,  but  this  is  not  a  result  of  legislation, 
since,  nominally,  the  coasting  trade  of  Germany  is  open  to  the 
ships  of  other  nations  that  grant  reciprocal  privileges  to  German 
ships. 

Both  the  meager  coasting  trade  of  the  Netherlands  proper 
and  the  extensive  trade  between  the  Netherlands  and  the  Dutch 
East  Indies  are  open  to  the  ships  of  nations  that  grant  reciprocal 
privileges  to  Dutch  ships. 


44  SELECTED   ARTICLES 

The  United  States,  France,  Italy,  Austria-Hungary,  Spain, 
and  Belgium,  among  the  more  important  maritime  countries,  have 
long  reserved  their  coasting  trade  to  national  ships,  while  Japan 
has  reserved  all  of  its  coasting  trade  since  1910. 

Russia  has  long  reserved  the  trade  between  Russian  ports  on 
the  same  sea  for  Russian  ships,  but  it  was  not  until  the  issuance 
of  the  royal  decree  of  May  29,  1897,  that  the  trade  between  all 
Russian  ports  was  restricted  to  Russian  ships. 

The  coasting  trade  of  Portugal  proper  and  the  trade  between 
Portugal  and  the  adjacent  islands  and  Portuguese  West  Africa 
are  reserved  for  Portuguese  vessels,  but  the  trade  between  Por- 
tugal and  other  Portuguese  possessions  is  open  to  foreign  vessels. 

Exemption  from  Import  Duties  on  Shipbuilding  Materials 

All  shipbuilding  materials  have  been  exempt  from  customs 
duties  in  England  since  the  adoption  of  the  free-trade  policy. 
Such  materials  have  been  exempt  for  many  years  also  in  Ger- 
many and  the  Netherlands.  Belgium  has  granted  free  admission 
to  shipbuilding  materials  since  April  12,  1864.  All  shipbuilding 
materials  have  been  on  the  free  list  in  the  United  States  since  the 
tariff  act  of  1909,  although  many  such  materials  had  been  ex- 
empt from  duties  since  the  tariff  act  of  1894. 

France,  Italy,  and  Spain  levy  duties  on  materials  used  in  the 
construction,  repair,  and  equipment  of  ships,  despite  the  fact  that 
their  iron  and  steel  industries  can  not  under  present  conditions 
compete  with  those  of  Great  Britain  and  Germany,  and  many 
products  of  these  industries  must  be  imported.  These  countries 
wish,  however,  to  protect  domestic  industries,  even  though  boun- 
ties must  be  paid  to  shipbuilders  to  offset  the  duties.  The  fact 
that  these  countries  levy  import  duties  on  shipbuilding  materials 
must  be  borne  in  mind  when  reference  is  made  to  the  fact  they 
pay  bounties  on  ship  construction. 

The  Scandinavian  countries  impose  import  duties  in  shipbuild- 
ing materials  but  allow  drawbacks.  Sweden  allows  a  drawback 
of  duties  actually  paid  on  materials  used  in  the  construction  in 
Swedish  yards  of  any  ship  of  40  tons  and  over.  Denmark  al- 
lows a  drawback  equal  to  not  more  than  2  per  cent  of  the  sell- 
ing price  of  all  ships  built  in  Danish  yards.  And  Norway  makes 
in  lieu  of  a  drawback  a  grant  amounting  to  2  per  cent  of  the 
selling  price  of  new  steamers  of  50  to  300  tons  and  sailing  ves- 
sels of  50  tons  and  over,  as  well  as  a  grant  equal  to  1.5  per  cent 


AMERICAN   MERCHANT   MARINE  45 

of  the  cost  of  repairs  on  vessels  of  300  tons  and  over,  if  the 
cost  is  at  least  1,000  kroner  ($268). 

Prior  to  1898  Russia  levied  a  duty  on  shipbuilding  materials 
as  well  as  ships.  In  1898  specified  shipbuilding  materials  and 
iron  or  steel  steamships  for  over-seas  trades  were  put  on  the 
free  list  for  a  period  of  ten  years.  This  policy  has  been  con- 
tinued from  time  to  time  by  subsequent  decrees. 

Admission  of  Foreign-built  Vessels  to  National  Registry 

For  many  years  no  country  of  importance  with  the  exception 
of  the  United  States  has  required  that  ships  flying  the  national 
flag  shall  be  of  domestic  construction,  although  practically  every 
country  has  made  this  requirement  in  the  case  of  steamships 
receiving  postal  subventions. 

England  has  granted  registers  to  foreign-built  ships,  in  other 
words  has  pursued  the  "free-ship"  policy,  since  about  1850.  At 
that  time  wooden  sailing  vessels  were  predominant  and  these 
could  be  secured  more  cheaply  in  the  United  States,  which  had 
larger  supplies  of  timber  and  naval  stores  and  a  more  efficient 
ship-building  industry.  As  a  result  of  this  free-ship  policy  the 
merchant  marine  of  Great  Britain  received  large  accessions  dur- 
ing the  Civil  War,  when  more  than  750,000  tons  of  American 
shipping  secured  foreign  registers  to  avoid  capture  or  destruc- 
tion. 

Germany  has  also  pursued  the  free-ship  policy  but  at  the  same 
time  has  given  much  encouragement  to  the  domestic  production 
of  ships  by  making  low  railroad  rates  on  materials  transported 
from  the  iron  and  steel  manufacturing  centers  in  the  interior  to 
the  ship-yards  along  the  coast  and  by  requiring  that  subventioned 
steamers  should  be  of  domestic  construction. 

France  has  at  times  gone  so  far  in  its  free-ship  policy  as  to 
pay  bounties  on  foreign-built  ships  but  has  paid  mail  subventions 
only  to  domestic-built  vessels,  although  the  recent  contract  of  the 
Compagnie  Generate  Transatlantique  provides  that  in  the  case 
of  difficulties  arising  from  "force  majeure"  the  company  may  be 
authorized  to  use  foreign-built  vessels. 

The  free-ship  policy  has  long  been  pursued  also  by  the  Scandi- 
navian countries,  the  Netherlands,  Belgium,  Spain,  Portugal, 
Greece,  Japan,  and  practically  every  other  country  except  the 
United  States.  The  pursuance  of  this  policy  has  been  due  chiefly 
to  the  advantage  to  be  gained  in  purchasing  steamships  in  the 


46  SELECTED   ARTICLES 

cheapest  market.  These  countries  have  not,  however,  consist- 
ently pursued  the  free-ship  policy,  since  most  of  them  have  stip- 
ulated in  mail  contracts  or  in  subsidy  legislation  either  that  the 
ships  receiving  subventions  or  subsidies  should  be  of  domestic 
construction  or  that  larger  grants  should  be  paid  to  domestic- 
built  ships. 

The  United  States  has  adopted  the  free-ship  policy  in  full 
only  since  the  outbreak  of  the  present  war  in  Europe  and  only  in 
respect  to  ships  engaged  in  the  over-seas  trade,  but  a  step  in  this 
direction  was  taken  in  the  Panama  Canal  act  of  August  24,  1912, 
which  admitted  to  American  registry  seaworthy  foreign-built 
ships  not  more  than  five  years  old.  Foreign-built  ships  are  not 
yet  permitted  to  engage  in  the  extensive  coasting  trade  of  this 
country,  while  domestic-built  ships  constructed  of  foreign  ma- 
terials have  been  permitted  to  engage  in  the  entire  coasting 
during  the  whole  year  only  since  the  passage  of  the  Panama 
Canal  act  of  August  24,  1912. 

The  policy  pursued  in  the  United  States  from  1792  down  to 
1914  of  granting  registers  only  to  American-built  ships  was  dic- 
tated originally  by  purely  mercantilistic  considerations,  but  in 
more  recent  years  it  has  probably  resulted  from  a  desire  to  foster 
the  domestic  shipbuilding  industry.  There  is  no  question  but 
that  this  policy  has  been  of  some  assistance  in  maintaining  the 
industry,  for  there  has  been  a  large  and  growing  demand  for 
ships  for  the  coastwise  trade,  which  is  restricted  to  American- 
built  ships  and  has  developed  rapidly.  The  building  program  of 
the  American  Navy  has  also  been  of  considerable  assistance.  If, 
however,  the  shipbuilding  industry  of  the  United  States  had  been 
obliged  to  depend  upon  orders  for  ships  in  the  over-seas  trade, 
it  would  have  declined  long  since  because  of  the  higher  costs  of 
American  ship  construction. 

One  of  the  strongest  arguments  against  various  subsidy  1  tills 
that  have  been  proposed  in  the  past  twenty  years  has  been  the 
fact  that  the  bills  provided  for  navigation  bounties  that  would 
have  been  to  a  large  degree  bounties  on  construction,  since  they 
were  intended  to  offset  the  higher  depreciation  and  interest 
charges  of  the  higher-priced  American-built  ships,  as  well  as  the 
higher  operating  costs.  Such  legislation  appeared,  therefore,  to 
grant  an  artificial  and  unwarranted  stimulus  to  the  construction 
of  over-seas  ships  and  to  have  been  prepared  in  the  interest  of 
the  shipbuilder  rather  than  in  the  interest  of  the  shipowner  or  of 
the  exporter. 


AMERICAN   MERCHANT   MARINE  47 

State-owned  Steamship  Lines 

A  number  of  countries  own  steamship  lines.  Belgium  has 
owned  for  many  years  a  number  of  vessels  that  have  been  oper- 
ated between  Ostend  and  Dover  in  connection  with  the  Belgian 
State  Railways.  Lloyd's  Register  shows  that  the  Belgian  gov- 
ernment owned,  in  1914,  n  steamers,  3  turbine  and  8  paddle- 
wheel  boats.  The  turbine  steamers  are  of  about  1,700  tons 
gross  capacity  and  have  a  speed  of  24  knots.  Three  of  the  other 
steamers  have  a  speed  of  22  knots,  and  three  others  a  speed  of 
21  knots.  It  is  interesting  to  note  that  the  speed  of  the  24-knot 
steamers  is  exceeded  only  by  that  of  the  Mauretania. 

The  relations  between  the  Russian  government  and  three  of 
the  most  important  Russian  steamship  lines  have  been  very 
close  for  a  number  of  years.  Almost  from  its  organization,  in 
1878,  the  Volunteer  Fleet  has  been  under  the  control  of  the  Min- 
istry of  the  Marine  and  the  Ministry  of  Commerce  and  Manu- 
facturers. It  would  appear  that  the  relations  between  the  Rus- 
sian government  and  the  volunteer  Fleet  are  even  closer  than  the 
relationship  between  the  United  States  government  and  the  Pana- 
ma Railroad  Co.  Line,  as  is  indicated  by  the  provisions  of  the 
charter  and  by-laws  of  this  company. 

The  property  of  the  Russian  Danube  Steamship  Co.  was  pur- 
chased by  the  Russian  government  in  1903,  when  the  company 
went  into  liquidation  and  is  now  managed  by  a  board  appointed 
by  the  Chief  of  the  Bureau  of  Merchant  Marine. 

Upon  a  reorganization  of  the  Archangel-Murman  Steamship 
Co.,  in  1895,  the  Russian  government  subscribed  for  about  56  per 
cent  of  the  new  capital  stock. 

By  a  law  of  April  5,  1908,  the  Italian  government  intrusted  to 
the  State  Administration  of  Railroads  the  operation,  after  July 
i,  1910,  of  certain  lines  of  navigation  between  the  mainland  and 
Sardinia  and  Sicily.  Twelve  steamships,  with  an  aggregate  gross 
tonnage  of  30,250  tons,  are  operated  in  these  services.  Four  of 
these  vessels  have  a  gross  tonnage  ranging  from  3,262  to  3,497 
tons  and  have  a  speed  of  20  knots. 

The  bulk  of  the  tonnage  under  the  Roumanian  flag  is  owned 
by  the  government.  In  1897  the  Roumanian  government  began 
the  operation  of  a  line  of  mail  steamships  between  the  Black 
Sea  port  of  Constantza  and  Constantinople  and  Alexandria,  and 
a  line  of  cargo  steamers  between  the  Danubian  ports  of  Roumania 
and  Rotterdam.  In  addition,  the  government  operates  a  local 


48  SELECTED   ARTICLES 

line  of  steamers  on  the  Danube.  Four  of  the  five  mail  steamers 
have  a  speed  of  18.5  knots,  while  the  other  has  a  speed  of  17.8 
knots.  Three  of  these  steamers  have  a  gross  tonnage  of  more 
than  3,100  tons  each.  The  five  cargo  boats  that  are  operated  on 
the  line  to  Rotterdam  range  in  tonnage  from  2,125  to  2,255  gross 
tons,  and  three  have  a  speed  of  9.5  knots,  while  the  other  two 
have  a  speed  of  10.3  knots. 

Brazil  owns  the  Lloyd  Brasiliero,  which  is  the  largest  steam- 
ship company  flying  the  Brazilian  flag. 

The  Swedish  State  Railways  own  three  steamers,  two  of  which 
are  of  more  than  3,000  tons  gross  capacity  and  16.5  knots  speed. 

Western  Australia  owns  a  line  of  small  steamers,  which  "was 
established  in  1913  to  save  the  settlers  of  the  south  coast  the  ad- 
vantage of  steamer  service,  which  was  in  danger  of  being  dis- 
continued by  the  commonwealth  government  owing  to  the  pro- 
hibitive demands  made  by  the  private  company  operating  this 
line." 

The  Imperial  Government  Railways  of  Japan  own  four  steam- 
ers— two  of  1,521  gross  tons  capacity  and  18  knots  speed  and 
two  of  3,107  gross  tons  capacity  and  15  knots  speed.  These 
steamers  are  operated  in  connection  with  the  government  rail- 
ways in  the  Korean  Channel  service  between  Shimonoseki  and 
Fusan. 

The  United  States  government  operates,  through  the  Panama 
Canal  Co.,  a  line  of  three  steamships  plying  between  New  York 
and  Colon.  The  government  owns  all  of  the  stock  of  the  Panama 
Railroad  Co.  excepting  a  few  shares. 

The  State  Railroads  of  France  own  eight  steamers,  which 
are  operated  in  the  channel  service  between  France  and  England. 
Two  of  these  steamers,  the  Newhaven  and  the  Rouen,  are  turbine 
steamers  with  a  capacity  of  1,656  gross  tons  and  a  speed  of  23.5 
knots. 


FORTUNES  OF  THE  SHIPPING  INDUSTRY1 

When  the  European  war  began,  and  business  men  in  all  coun- 
tries were  anxiously  calculating  which  industries  would  be  helped 
and  which  injured,  what  old  trade  enterprises  would  be  destroyed 

1  Nation.  102:294-5.  March  9,  1916. 


AMERICAN    MERCHANT   MARINE  49 

and  what  new  ones  would  be  called  into  being,  there  was  the 
greatest  imaginable  confusion  of  opinion.  Scores  of  confident 
predictions,  apparently  well  founded,  turned  out  to  be  wholly  mis- 
taken. Export  trade  was  to  be  paralyzed  through  loss  of  access 
to  important  markets  now  blockaded.  Inability  to  obtain  any 
longer  the  foreign  raw  materials,  necessary  to  certain  lines  of 
manufacture,  would  force  those  industries  to  shut  down.  Not 
least  of  all  with  international  trade  completely  upset,  by  the  war 
and  the  world-wide  financial  reaction  which  came  with  it,  the 
ocean  shipping  trade  would  be  reduced  to  small  dimensions. 

There  were  shrewder  and  more  far-seeing  business  men  who 
reached  very  different  conclusions,  even  in  1914.  When  they  did 
not  rely  wholly  on  general  principles,  they  were  apt  to  learn  from 
the  history  of  the  Napoleonic  wars — the  last  international  conflict 
of  any  such  magnitude — that  the  trade  and  manufacture  of  neu- 
tral nations  would  be  immensely  stimulated,  both  by  elimination 
of  blockaded  competitors  and  by  purchase  of  materials  of  war ; 
that  food  products  would  be  in  unprecedented  demand,  and  that 
the  driving  of  one  belligerent's  merchant  fleet  from  the  seas,  and 
the  drafting  of  another  belligerent's  carrying  ships  into  the  army 
transport  service,  would  eventually  create  an  actual  scarcity  of 
ocean  ships  and  abnormally  high  prices  for  ocean  freights. 

All  this  has  happened  in  the  present  war,  and  to-day  the  most 
remarkable  duplication  of  the  experience  of  a  hundred  years  ago 
has  been  in  the  shipping  trade.  Yet  it  was  only  gradually  that 
the  real  situation  in  that  industry  came  to  light. 

The  London  Economist,  writing  at  the  end  of  last  October, 
commented  as  follows  on  the  shipping  situation : 

The  present  extraordinary  condition  of  the  freight  market  presents 
an  astonishing  contrast  to  the  general  anticipation  of  ship-owners  before 
the  war,  for  when  war  broke  out  many  men  were  actually  within  sight  of 
big  fortunes,  though  they  were  in  danger  of  almost  instant  bankruptcy. 
Nobody  realized  the  demand  for  tonnage  that  was  to  result  from  the 
war,  and  most  ship-owners,  foreseeing  little  use  for  steamers  in  their 
normal  employment,  were  anxious  to  have  them  requisitioned  by  the 
government,  at  the  government's  own  rates. 

Later  on,  as  the  need  for  tonnage  grew,  their  attitude  changed,  and 
so  far  from  courting  government  employment,  they  were  only  anxious 
to  keep  their  steamers  for  their  own  use,  and  run  them  in  the  ordinary 
course  of  trade.  Freights  rose  from  day  to  day,  and  the  revenue-earning 
power  of  steamers  increased  to  a  point  that  before  the  war  would  have 
been  considered  fabulous. 

Since  this  was  written,  the  difficulties  of  the  situation  in  Eng- 


SO  SELECTED   ARTICLES 

land,  already  serious,  appear  to  have  been  greatly  aggravated.  In 
New  York,  a  tour  of  the  ship-brokers'  offices  last  week  brought 
to  light  incidents  that  rival  the  tales  of  munitions  millionaires. 
One  agent  told  of  a  4,ooo-ton  American  vessel,  originally  costing 
$30,000  several  years  ago,  which  lately  sold  at  $185,000,  and  was 
considered  a  bargain  by  her  purchasers.  A  British  steamer 
changed  hands  a  week  ago  for  $525,000  cash,  which  brought  but 
$325,000  last  summer.  This  ship  was  immediately  loaded  with  a 
cargo  for  France  at  $40  per  ton,  and  will  pay  a  handsome  divi- 
dend on  the  first  voyage,  if  she  avoids  the  submarines  and  mines. 

Shipbuilding  firms  are  offered  prices  previously  unheard  of 
for  the  product  of  their  yards.  Boats  ready  for  delivery  this 
month  are  bringing  as  much  as  $125  per  ton.  Those,  however, 
which  will  not  be  ready  until  the  autumn  sell  at  only  $95  per  ton ; 
obviously  because  buyers  share  the  uncertainty  of  the  general 
public  as  to  how  long  the  war  will  continue,  and  because  of  their 
belief  that  the  present  rate  of  profits  in  shipping  cannot  last  long 
after  the  conflict  closes. 

Since  the  autumn  of  1914,  freight  rates  have  been  continually 
rising  to  new  high  levels,  and  shipping  experts  see  no  prospect  of 
immediate  relief,  unless  peace  comes.  Munitions  of  war  are  not 
the  only  exports  that  have  to  pay  almost  unheard  of  rates.  Grain 
to  Liverpool,  which  before  the  war  was  carried  across  the  Atlan- 
tic for  five  cents  a  bushel,  now  costs  fifty  cents  a  bushel. 

Flour  is  going  to  England  in  sacks  at  a  rate  of  ninety  cents 
per  100  pounds,  compared  with  an  ante-bellum  rate  of  twelve 
cents.  Provisions  have  increased  from  a  rate  of  $4.85  per  ton 
on  August  i,  1914,  to  $i  per  100  pounds  on  November  i,  1915, 
and  now  stand  at  $1.25  per  100  pounds.  It  now  costs  $2.50  per 
loo  pounds  to  send  cotton  from  New  York  to  Liverpool — when 
steamer  accommodation  can  be  obtained.  Before  the  war,  it  cost 
but  twenty  cents. 

The  profits  now  being  made  in  ocean  shipping  are  illustrated 
in  a  report  sent  by  the  United  States  Consul  at  Cardiff,  Wales, 
which  gives  authentic  figures  published  by  the  president  of  the 
Cardiff  Chamber  of  Commerce.  One  of  the  instances  given  was 
of  a  vessel  of  6,100  tons  dead  weight  that  had  earned  a  profit  of 
$3.153  in  a  voyage  to  and  from  the  River  Plate  from  June  to 
December,  1914,  Freights  were  low  at  that  period,  and,  after 
interest  had  been  paid  on  capital,  there  were  no  profits  left.  To- 
day, the  president  of  the  Chamber  of  Commerce  said,  the  vessel 


AMERICAN    MERCHANT   MARINE  51 

could  be  chartered  for  Rio  Janeiro  at  $10.33  per  ton,  and  back 
to  the  United  Kingdom  from  Rosario  at  $11.55,  and  the  net  profit 
for  the  round  voyage  of  four  months  would  amount  to  $193,000. 

He  mentioned  another  vessel  of  3,700  tons  register,  built  in 
1910  at  a  cost  of  $204,390,  that  had  been  chartered  for  twelve 
months  at  $7.30  per  ton,  dead  weight,  per  month.  With  every- 
thing running  smoothly,  and  no  accidents,  the  gross  earnings  of 
this  vessel  to  the  owners  would  amount  to  $553,990.  The  running 
expenses,  including  war-risk,  would  amount  to  $10,000  per  month, 
leaving  a  net  year's  profit  of  $413,990.  The  ship  would  thus 
twice  pay  for  itself  in  a  year. 

One  very  important  reason  for  this  state  of  things  is  that  the 
English  lines  have  had  so  many  of  their  vessels  called  into  the 
transport  service  by  the  government  that  their  facilities  have  been 
very  seriously  crippled.  The  British  Admiralty  recently  an- 
nounced that  it  had  requisitioned  3,100  steamers  since  the  begin- 
ning of  the  war.  Since  there  were  only  12,602  British  steam 
vessels  of  all  classes  registered  at  the  end  of  1913,  and  the  gov- 
ernment, as  a  rule,  took  over  those  of  the  greatest  tonnage,  it 
will  be  seen  that  fully  one-fourth  of  the  British  merchant  fleet  is 
withdrawn  from  commercial  service — not  to  mention  the  German 
vessels  now  idle  in  harbor,  or  the  great  number  of  merchant  ships 
destroyed  by  the  enemy. 

But  what  of  the  longer  future?  One  thing  seems  to  be  cer- 
tain— that  merchants  who  buy  or  charter  vessels  at  present  rates 
are  gambling  that  the  conflict  will  last  long  .enough  for  them  to 
reap  a  harvest.  Still,  even  if  peace  is  near,  they  maintain  that 
there  will  be  a  scarcity  of  tonnage  for  at  least  a  year  after  the 
treaty  is  signed. 

It  must  be  remembered,  however,  that  hundreds  of  German 
ships  will  be  released  by  a  treaty  of  peace,  that  munitions  ship- 
ments will  cease,  and  that  the  British  Admiralty  will  be  able  to 
restore  3,100  steamers  to  their  owners  as  soon  as  the  war  is  over 
and  the  armies  and  their  supplies  are  brought  home.  And  what 
then?  The  precedent  of  the  Napoleonic  wars  recurs  to  mind. 
In  the  very  severe  trade  reaction  which  then  ensued  among  the 
belligerent  communities,  the  markets  for  wheat,  for  grain-growing 
land,  for  metals,  and  for  plants  manufacturing  war  materials, 
suffered  heavily.  But  few  industries  were  confronted  with  such 
sudden  depression,  such  speedy  reversion  to  conditions  where  sup- 
ply was  vastly  in  excess  of  demand,  as  the  ocean  shipping  trade. 


52  SELECTED  ARTICLES 

THE  USE  AND  BENEFITS  OF  AN  AMERICAN 
MERCHANT  MARINE1 

There  is  perhaps  no  national  question  more  widely  discussed 
and  less  understood  by  the  average  citizen  than  the  American 
Merchant  Marine.  The  practical  reason  why  the  United  States 
should  have  a  merchant  marine  is  that  without  it  the  expansion 
of  our  foreign  trade  is  utterly  impossible.  That  "Trade  follows 
the  Flag"  is  unquestionably  true,  especially  when  the  flag  is 
accompanied  by  commercial  energy,  tact  and  honesty  and  backed 
by  a  national  policy  of  diplomatic  firmness,  dignity  and  self- 
respect. 

The  large  and  increasing  commerce  of  England  and  Germany 
with  over-sea  countries  was  gained  primarily  by  the  aid  of  a  well- 
organized  and  a  well-managed  merchant  marine,  fostered  and 
encouraged  by  good  laws  and  all  other  agencies  of  government. 
Great  Britain  with  more  limited  natural  resources  than  ourselves 
has  left  no  act  undone  to  encourage  the  growth  of  her  own 
merchant  fleet,  and  at  the  same  time  to  discourage  any  growth 
of  ours.  From  Colonial  times,  when  England  closed  her  own 
ports  and  those  of  her  colonies  to  American  ships,  her  efforts 
against  our  merchant  marine  have  been  felt  continuously.  How 
successful  this  campaign  has  been  is  shown  by  the  fact  that  while 
in  the  early  part  of  the  nineteenth  century,  over  90  per  cent,  of 
our  foreign  commerce  was  carried  in  American  bottoms,  yet  due 
to  national  indifference,  in  1914,  all  but  8.6  per  cent  of  our  foreign 
commerce  was  carried  in  vessels  flying  a  foreign  flag. 

There  have  been  a  few  spasmodic  attempts  toward  the  crea- 
tion of  an  adequate  supply  of  merchant  ships.  In  the  first  half  of 
the  nineteenth  century  laws  were  passed  allowing  a  discrimina- 
tion of  10  per  cent  in  favor  of  all  goods  imported  into  this  country 
in  American  bottoms,  and  foreign  ships  were  made  to  pay  a  tax 
of  50  cents  per  ton  against  6  cents  for  our  own. 

In  1845,  the  first  mail  or  subsidy  law  ever  enacted  by  our 
federal  Congress  enabled  the  Collins  Line  in  1849  to  enter  into 
competition  with  the  Cunard  Company,  which  even  at  that  early 
date  began  to  practice  the  monopolistic  tactics  which  have  been 
so  perfected  by  the  steamship  trust.  In  1855,  due  to  the  dissen1- 

1  Bulletin  No.  2.  Directors  of  the  Port  of  Boston,  Edward  F.  McSwee- 
ncy,  chairman. 


AMERICAN   MERCHANT   MARINE  53 

sions  which  had  grown  up  on  account  of  slavery,  this  subsidy  law 
was  made  the  object  of  attack  by  Southern  leaders  in  Congress. 
The  mail  contracts  were  modified  and  in  1858  taken  away  alto- 
gether, and  the  heavy  hand  of  foreign  steamship  companies, 
sailing  under  liberal  government  aid,  was  felt.  During  the  period 
in  which  these  subsidies  and  mail  contracts  provided  by  Congress 
were  in  effect,  our  shipping  increased  by  leaps  and  bounds.  In 
1855,  the  tonnage  of  the  United  States  was  about  two  and 
one  half  times  as  great  as  it  was  at  the  outbreak  of  the  present 
war. 

When  in  1849  the  Collins  Line  was  established  between  Liver- 
pool and  New  York,  the  rates  of  the  Cunard  Line,  which  had 
previously  practically  no  competition,  was  reduced  from  £7 
10  shillings  per  ton  to  £4,  or  45  per  cent.  With  practically 
no  ships  under  our  flag  to  compete  with  the  foreign  shipping  trust, 
we  are  to-day  probably  paying  tolls  which  are  proportionately  as 
excessive  as  they  were  at  the  time  the  Collins  Line  so  radically 
reduced  them  through  the  wise  action  of  Congress. 

At  the  present  time  we  are  in  the  grasp  of  a  foreign  steamship 
trust  more  gigantic  and  more  powerful  than  any  trust  which  has 
dominated  our  interior.  Secure  in  the  fact  that  practically  every 
steamship  line  in  existence  to-day  is  a  member  of  one  or  more 
of  its  intricate  divisions,  our  handful  of  ships  are  powerless  to 
offer  even  the  semblance  of  effective  competition. 

While  the  ostensible  and  visible  intent  of  this  monopoly  is  to 
dominate  foreign  shipping,  and  eliminate  marine  competition, 
the  real  and  only  purpose  is  to  dictate  to  the  world  where  and 
from  whom  it  shall  buy  its  goods.  The  trust  arranges  freight 
rates  and  sailings  to  suit  its  own  convenience  and  interest,  regard- 
less of  those  of  the  shipper ;  it  has  a  fleet  of  "fighting"  ships  to 
send  to  ports  where  ships  independent  of  the  trust  propose  to 
cut  rates  and  get  business ;  it  boycotts  merchants  who  patronize 
independent  lines,  by  delaying  shipments  or  refusing  them  out- 
right between  sailings  of  the  independent  competitor,  and  it 
rules  the  seas  with  a  high  hand,  regardless  and  contemptuous  of 
the  laws  which  appear  to  be  unable  to  reach  them. 

In  short,  every  detail  of  the  shipment  of  our  goods  is  worked 
out  for  us  by  our  bitterest  rivals.  It  would  be  no  less  absurd  if 
a  merchant  chose  his  strongest  competitor  as  his  expressman  in 
the  delivery  of  his  goods,  and  then  wondered  why  the  other  fel- 
low got  the  cream  of  the  trade.  One  of  the  essential  elements 


54  SELECTED   ARTICLES 

of  good  business  demands  that  the  seller  of  goods  get  into  per- 
sonal touch  with  his  buyer,  and  this  is  the  one  thing  the  United 
States  has  absolutely  ignored.  Great  Britain  and  Germany  have 
both  realized  that  it  was  not  only  important  to  see  that  their 
goods  reached  their  destination,  but  that  this  prime  essential  of 
good  business — personal  contact — could  be  attained  only  by 
employing  their  own  ships  as  carriers.  The  following  compari- 
son will  show  very  clearly  the  different  viewpoints  taken  by 
Germany  and  the  United  States  on  this  vital  question. 

To  convey  our  exports  to  Germany  in  1914  we  required  745 
ships  with  a  total  tonnage  of  3,877,334,  of  which  number  but  2 
ships  with  a  total  of  8,406  tons  flew  the  American  flag. 

In  the  same  year  535  ships  with  a  total  of  3,213,204  tons  left 
Germany  with  cargoes  for  the  United  States.  Of  this  number 
418  ships  or  2,865,929  tons  flew  the  German  flag. 

In  other  words  90  per  cent,  of  Germany's  exports  to  the 
United  States  were  carried  in  German  bottoms,  while  we  in  the 
United  States  were  content  to  let  but  two-tenths  of  i  per  cent, 
of  our  exports  to  Germany  be  carried  under  the  American  flag. 

It  is  also  interesting  to  note  through  the  chart  how  clearly 
the  rise  in  German  exports  has  followed  the  rise  of  the  tonnage 
of  her  merchant  marine. 

While  Germany  and  the  United  States  have  practically 
doubled  their  exports  during  the  past  fifteen  years,  it  must  be 
remembered  that  Germany  has  made  her  growth  in  manufac- 
tured goods  while  the  United  States  has  been  supplying  the 
world  those  necessities  of  life  which  only  comparatively  unde- 
veloped countries  could  furnish.  It  takes  no  aggressive  selling 
campaign  to  market  our  600  million  dollar  cotton  crop.  We  have 
a  practical  monopoly  in  raw  cotton.  Our  tremendous  commer- 
cial short-sightedness  as  a  nation  is  that  we  are  content  to  send 
only  one-twentieth  of  our  tremendous  export  in  this  commodity 
as  a  finished  product.  If  the  United  States  could  in  1914  have 
exported  as  manufactured  goods,  one  half  of  the  crop  sent  out 
of  the  country  as  raw  material,  it  would  have  raised  the  exports 
by  $200,000,000,  of  which  sum  50  per  cent  would  have  gone  into 
the  pockets  of  an  army  of  over  200,000  mill  hands.  An  active 
merchant  marine  under  our  flag  is  the  only  means  possible  to 
begin  to  achieve  this  end. 

Recent  inspired  statements  concerning  the  growth  of  our 
merchant  fleet,  to  the  effect  that  our  merchant  marine  is  second 


AMERICAN   MERCHANT   MARINE  55 

only  to  that  of  Great  Britain,  do  not  stand  the  test  of  analysis. 
Our  merchant  fleet  of  1914  is  practically  8,000,000  gross  tons, 
divided  as  follows: 

Tons    / 

Coastwise  and  Fisheries 3,962,141 

Great  Lakes   2,882,922 

Foreign  Trade 1,076,152 

The  most  lamentable  feature  of  this  million  tons  engaged  in 
the  foreign  trade  is,  that  it  is  less  than  one  half  of  the  figures 
for  1855  (sixty  years  ago)  when  over  2,500,000  tons  were  en- 
gaged in  the  over-sea  trade,  and  only  10  per  cent  more  than  were 
registered  in  the  foreign  trade  in  1810. 

In  short,  we  had  in  1914  about  one-tenth  of  the  available 
tonnage  for  foreign  trade  of  Great  Britain  and  about  one-fourth 
that  of  Germany.  For  the  purpose  of  advancing  our  foreign 
trade,  our  7,000,000  tons  either  sailing  coastwise  or  on  the  Great 
Lakes  can  be  of  no  value. 

The  South  American  trade  which  at  present  offers  such  great 
promise  is  completely  in  the  hands  of  this  shipping  combination, 
and  by  its  system  of  rates,  rebates  and  discriminations  to  buyers 
of  foreign  goods  has  actually  driven  down  our  exports  to  South 
America  from  over  146  millions  in  1913  to  124  millions  in  1914 
and  to  99  millions  in  1915.  And  this  in  spite  of  the  fact  that  the 
United  States  has  been  for  the  past  few  years  waking  up  to  the 
necessity  of  increasing  our  foreign  commerce.  While  it  is  true 
that  the  South  American  republics  have  been  in  straitened 
financial  circumstances  for  the  past  few  years,  yet  with  Ger- 
many's 100  million  dollar  imports  practically  wiped  out  and 
England's  severely  crippled,  this  fact  does  not  explain  the  alarm- 
ing decrease  shown  by  us.  Despite  the  fact  that  our  consuls  in 
foreign  lands,  our  special  representatives  of  the  Department  of 
Commerce  sent  abroad  to  gather  first  hand  information,  cham- 
bers of  commerce  and  boards  of  trade,  have  all  been  doing 
yeoman  service  to  stimulate  this  trade,  the  handicaps  against  our 
merchant  marine  are  such  that  even  this  trade,  as  it  comes,  is 
carried  in  alien  ships. 

The  following  figures  show  effectively  the  situation  in  the 
South  American  field. 

In  1914,  258  ships  cleared  at  the  various  United  States  ports 
for  Argentina  and  of  this  number  but  2  flew  the  American  flag. 
Of  the  230  that  cleared  for  Brazilian  ports,  but  17  were  Ameri- 


56  SELECTED   ARTICLES 

can.  The  following  table  gives  the  total  ship  tonnage  that 
cleared  for  South  America  for  the  past  five  years  and  the  Ameri- 
can tonnage  and  its  percentage  of  the  total. 

Cleared  from  United  States  Ports  for  South  America 

United  States  Percentage  of 

Total  Ships'  Ships'  United  States 

Year                                        Tons  Tons  Tonnage 

1910     1,654,971  "5.497  7 

19"     1,633,210  148,484  9 

1912     2,203,540  125,380  6 

I9U     2,302,531  119,647  5 

1914     2,429,650  192,479  8 

After  the  war  began,  American  exporters  having  contracts  at 
a  stated  price  with  foreign  ships  with  six  months  to  two  years 
to  run  could  not  get  their  goods  taken  to  Europe  because  the 
shipping  trust  could  get  sometimes  as  high  as  five  times  as  much 
from  other  shippers.  The  cold  avarice  shown  in  the  broken 
pledges  of  these  shipping  companies  during  the  period  since  the 
war  should  of  itself  be  enough  to  force  us  to  establish  our  own 
merchant  marine,  and  thus  make  ourselves  independent  of  the 
shipping  monopoly,  whose  allegiance  is  elsewhere,  and  which, 
while  accepting  toll  from  us,  does  everything  possible  to  keep 
us  weak  on  the  seas  in  order  to  insure  the  primacy  of  our  alien 
competitors  in  the  markets  of  the  world.1 

Before  the  Civil  War  the  United  States  built  up  a  merchant 
marine.  Since  then  a  mass  of  legislation,  militating  against  the 
building  of  an  American  merchant  marine,  has  been  passed  by 


1  The  following  dividends  paid  within  the  last  few  years  show  the 
profits  in  the  shipping  business  which  come  in  part  from  our  trade. 

The  British  house  of  Furness,  Withy  &  Co.,  Ltd.,  operating  cargo 
ships,  earned  and  declared  in  the  year  ending  April  30,  1915,  a  dividend 
of  10  per  cent. 

The  Nippon  Yusen  Kaisha  Steamship  Company  of  Japan  declared  a  10 
per  cent  dividend  this  year  and  carried  forward  a  balance  of  nearly  half 
a  million  dollars. 

The  Oceanic  Steam  Navigation  Company  (White  Star  Line)  paid  10 
per  cent  dividends  in  1908;  20  per  cent  in  1909;  30  per  cent  in  1910; 
30  per  cent  in  1912;  65  per  cent  in  1913. 

Ellerman  Lines  paid  13  per  cent  in  1911;  12  per  cent  in  1912;  22  per 
cent  and  100  per  cent  bonus  in  1913. 

Orient  Steam  Navigation  Company  paid  5  per  cent  and  50  per  cent 
bonus  in  IQII  and  1912;  5  per  cent  and  50  per  cent  bonus  in  1912-13. 

Strick  Line  paid  10  per  cent  yearly  since  inception;  paid  300  per  cent 
bonus  in  1905;  50  per  cent  bonin  in  1913. 

Peninsular  and  Oriental  Steam  Navigation  Company  paid  13  per  cent 
for  past  twenty-three  yearn,  ending  1912-13  and  is  per  cent  in  1913-14. 

Cunard   Line   paid    10   per  cent    in   1912-13   and  20   per  cent    in    1014-15. 

Anchor   Line  paid  20  per  cent  in    1912-13  and  20  per  cent  in    1913-14. 

The  German  lines  before  the  war  were  equally  prosperous. 

From  these  figures  it  fceems  to  be  plain  that  under  the  proper  condi- 
tions steamship  companies  are  evidently  able  to  make  good  returns  on 
their  investment. 


AMERICAN    MERCHANT   MARINE  57 

Congress.  Financial  interests  concerned  in  the  operation  of  the 
ship  yards,  and  the  thousand  and  one  selfish  interests  which  did 
not  dream,  or  did  not  care,  that  they  were  making  the  mistake 
of  killing  the  goose  which  lays  the  golden  egg,  have  been  help- 
ing to  pass  laws,  which  make  it  harder  for  American  capital 
successfully  to  engage  in  maritime  commerce.  The  members  of 
Congress  representing  maritime  sections  are  few  in  comparison 
with  the  total  number,  and  it  is  easy  for  an  inland  congressman 
to  accept  the  specious  pleas  made  for  the  passage  of  certain  bills 
regulating  commerce.  Too  frequently  the  congressmen  and 
senators  even  from  port  districts  join  in  killing  the  business 
prosperity  of  their  constitutents.  The  sum  total  is  that  the  laws 
of  the  United  States  in  relation  to  shipping  are  more  severe  than 
in  any  other  country  in  the  world.  Our  ships  cost  more  to 
build  and  operate,  this  being  especially  true  of  wages  and  condi- 
tions of  labor. 

Tonnage  of  Steamships  Available  for  Over-sea  Trade1 

SHIPS  OF  OVER  2O,OOO  TONS 

United  States,  I  ship,  20,718  tons;  Germany,  8  ships,  269,694 
tons;  Great  Britain,  8  ships,  260,571  tons. 

SHIPS  OF  OVER   I5,OOO  TONS 

United  States,  I  ship,  20,718  tons;  Germany,  21  ships  521,914 
tons;  Great  Britain,  25  ships,  553,752  tons. 

SHIPS  OF  OVER  10,000  TONS 

United  States,  14  ships,  172,551  tons;  Germany,  42  ships, 
773»327  tons;  Great  Britain,  140  ships  1,918,199  tons. 

SHIPS  OF  OVER  5,OOO  TONS 

United  States,  143  ships  085,730  tons;  Germany,  272  ships, 
2,267,099  tons ;  Great  Britain,  977  ships,  7,435,669  tons. 

La  Follette's  Seamen's  Bill,  undoubtedly  actuated  by  humani- 
tarian considerations,  in  some  of  its  provisions  is  operating  to 
drive  American  shipping  off  the  sea.  The  American  Consul  at 
Hongkong,  in  a  report  made  public  by  the  State  Department  on 
September  21,  1915,  states  that  the  Japanese  shipping  lines 
which  virtually  control  the  Pacific  trade  will  continue  to  discrim- 
inate in  favor  of  Japanese  shippers  in  apportioning  space  in 

1  Lloyd's  Register,    1915-16. 


58  SELECTED   ARTICLES 

steamers.  The  removal  of  American  vessels,  as  a  result  of  the 
Seamen's  act,  from  the  trans-Pacific  run  will  precipitate  a  situa- 
tion of  the  gravest  sort,  involving  a  stoppage  practically  of  all 
business  in  the  Far  East  obtained  by  American  manufacturers 
since  the  beginning  of  the  war.  Whether  the  coastwise  lines  will 
be  obliged  to  raise  their  rates  to  the  level  of  rail  tariffs  or  go 
out  of  business  cannot  be  determined,  until  the  full  effects  of 
the  law  have  been  felt.  There  may  be  something  in  the  sug- 
gestion that  without  the  assistance  of  the  railroads,  which  are 
beginning  to  feel  the  effects  of  the  increase  in  water-borne  traffic, 
such  a  law  could  not  have  been  passed  by  Congress.  At  any  rate, 
it  is  on  the  statute  books  operating  to  prevent  the  continuance 
of  the  little  merchant  marine  we  have  and  will  certainly  prevent 
in  a  large  degree  the  building  of  any  more  ships  in  normal  times. 

If  Congress  believes  the  United  States  should,  by  legislation, 
place  in  operation  of  American  vessels  burdensome  requirements 
not  imposed  on  nor  applying  to  ships  of  any  other  government, 
then  Congress  with  equal  justice  should  legislate  in  behalf  of 
the  American  shipowner  and,  either  by  direct  subvention  or  some 
form  of  preferential  rates,  provide  the  income  for  American 
vessels  which  will  enable  the  shipowners  to  bear  the  additional 
cost  of  operation  imposed  by  legislation.  It  may  be  a  comfort 
to  the  American  seaman,  who  because  of  our  shipping  laws  is 
forced  to  sit  on  a  cap-log  and  watch  alien  ships  coming  in  and 
going  out  of  the  harbors  of  the  United  States,  to  dream  of  the 
blissful  existence  of  the  sailorman  if  our  country  did  have  a 
merchant  marine.  The  American  workman,  however,  loafing 
three  or  four  months  out  of  each  year,  because  Congress  impedes 
rather  than  encourages  the  opportunity  to  place  his  products  in 
the  foreign  markets  will  soon  learn  that  he  too  has  a  vital  interest 
in  the  development  of  an  American  merchant  marine. 

America  needs  a  merchant  marine  and  needs  it  most  acutely, 
and  of  all  the  commonwealths  of  this  republic  none  needs  it 
more  urgently  than  Massachusetts.  The  manufacturers  and 
wage-earners  of  this  state  at  the  close  of  the  war  will  be  paying 
the  penalty  of  the  lack  of  a  merchant  marine  in  arrested  indus- 
trial activity  and  a  lessened  productivity. 

In  normal  times  we  pay  the  alien  marine  corporations 
$300,000,000  annually  for  carrying  our  products  to  the  market, 
yet  to-day,  when  war  has  decreased  our  legitimate  trade  most 
markedly  the  tribute  we  pay  to  the  foreign  carrier  has  not 


AMERICAN    MERCHANT   MARINE  59 

lessened,  for  his  rates  have  multiplied  in  the  presence  of  our 
necessity  and  helplessness.  Every  ship  transferred  from  the 
traffic  of  peace  to  the  trade  of  war  has  added  to  the  burdens 
borne  by  the  American  farmer,  manufacturer,  merchant  and 
worker.  We  have  neglected  to  provide  for  the  rainy  day  of 
commerce;  we  have  wasted  our  time  in  endless  and  aimless 
controversies.  While  we  have  split  hairs  and  chopped  logic  we 
have  failed  to  restore  our  merchant  marine;  we  have  depended 
on  the  alien  to  do  the  work  that  only  we  ourselves  can  and 
should  do,  and  to-day  we  are  reaping  as  we  have  sowed. 

Massachusetts,  in  the  early  days,  the  leading  maritime  state 
of  the  Union,  has  upon  its  statute  books  most  liberal  laws  to 
encourage  investment  by  the  people  of  the  Commonwealth  in  a 
merchant  marine, — the  taxes  on  persons,  partnerships  or  cor- 
porations engaging  in  either  the  foreign  or  the  coastwise  trade 
are  but  one-third  of  i  per  cent,  of  the  value  of  the  ships  where 
owned  by  individuals  or  partnerships,  and  the  same  amount  plus 
a  minimum  excise  tax  of  one-tenth  of  I  per  cent  where  owned 
by  corporations.  Individuals  or  partnerships  establishing  in 
Massachusetts  and  doing  business  here  in  the  foreign  or  coast- 
wise trade  would,  therefore,  pay  but  $3.33  per  $1,000  valuation 
and  corporations  but  $4.33  per  $1,000  valuation  per  year  in 
taxes  as  compared  with,  the  average  of  $18.55  per  $1,000  valua- 
tion per  year  on  all  other  lines  of  individual,  partnership  or 
corporate  property  throughout  the  state.  This  difference  amounts 
to  a  most  substantial  subsidy  of  from  76  per  cent  to  82  per  cent 
in  taxes  as  the  practical  contribution  of  the  Commonwealth  of 
Massachusetts  to  the  upbuilding  by  its  citizens  of  an  American 
Merchant  Marine. 


PROBABLE   EFFECTS   OF  THE   WAR  ON   THE 
FOREIGN  TRADE  OF  THE  UNITED  STATES1 

In  the  summer  and  early  autumn  of  1914  it  was  the  belief 
of  many  that  American  exports  would  speedily  take  the  place 
of  European  wares  in  the  neutral  markets  of  the  world,  and  that 

1  By  Grover  G.  Huebner,  Assistant  Professor  of  Transportation  and 
Commerce,  University  of  Pennsylvania.  Read  at  the  meeting  of  the 
Academy  of  Political  Science,  November  12,  1915.  Printed  in  the  Pro- 
ceedings. 6:174-84.  October,  1915. 


60  SELECTED   ARTICLES 

the  advantages  gained  under  the  stress  of  war  would  in  a  large 
measure  prove  to  be  permanent.  Particular  emphasis  was  placed 
upon  markets  of  South,  Central  and  North  America,  Australasia, 
the  Orient  and  Africa,  for  it  was  there  that  American  and 
European  manufactured  wares  had  been  in  active  competition 
for  more  than  a  dozen  years.  Though  American  exporters  had 
made  rapid  progress,  they  had  Seen  obliged  to  compete  against 
strongly  established  foreign  rivals.  That  the  intensity  of  this 
rivalry  would  be  less  so  long  as  the  principal  European  countries 
were  engaged  in  their  campaign  of  mutual  destruction  was  cer- 
tain, and  it  therefore  seemed  that  an  opportunity  was  being 
offered  to  American  exporters  to  enter  these  markets  unhindered 
and  so  to  intrench  themselves  commercially  that  when  peace 
returned  they  would  find  themselves  in  a  greatly  improved  com- 
petitive position.  When  their  British,  German  and  French  rivals 
later  re-entered  these  markets  they  could  at  least  make  a  whole- 
hearted effort  to  retain  permanently  as  large  a  share  of  trade  as 
possible. 

The  expectation  of  acquiring  a  large  deep-sea  merchant 
marine  also  ran  high,  and  was  accompanied  by  the  hope  that  the 
gains  readily  made  possible  by  the  neutral  position  of  the  United 
States  would  in  a  large  measure  prove  to  be  permanent.  To  put 
these  hopes  into  effect,  the  ship-registry  laws  were  so  amended 
as  greatly  to  facilitate  the  registration  of  foreign-built  vessels 
under  the  American  flag. 

That  the  export  trade  of  the  United  States  has  made  a  great 
advance  since  the  outbreak  of  hostilities  is  now  so  well  known 
that  repetition  seems  superfluous.  The  value  of  domestic  ex- 
ports in  the  fiscal  year  1915  was  $2,716,000,000  as  compared  with 
$2,329,700,000  in  the  previous  year,  and  the  excess  of  exports  or 
so-called  favorable  balance  of  trade  exceeded  a  billion  dollars, 
while  in  1914  it  had  been  less  than  half  a  billion.  In  spite  of 
declining  imports,  the  total  foreign  trade  reached  the  unprece- 
dented aggregate  of  $4,442,759,000;  and  railroads,  vessels  and 
ports  are  being  congested  with  foreign-bound  freight.  Mean- 
while, the  registered  merchant  fleet  of  the  United  States— that 
portion  of  the  marine  which  is  engaged  in  the  foreign  trade — 
grew  from  1,076,152  gross  tons  on  June  30,  1914,  to  1,871,543  on 
June  30,  1915 — a  net  gain  of  795,391  tons  for  the  year. 

Yet  these  rapid  advances  in  exports  and  vessel  tonnage  do 
not  constitute  evidence  that  the  early  expectations  of  permanent 


AMERICAN   MERCHANT   MARINE  61 

trade  advantages  are  being  realized.  A  glance  at  the  foreign 
trade  returns  discloses  the  temporary  nature  of  the  export  boom 
and  abnormal  trade  balance ;  and  unless  effective  action  of  some 
sort  is  taken  there  is  every  likelihood  that  the  most  of  the  for- 
eign-built vessels  that  changed  registry  during  the  war  will  return 
to  foreign  flags  when  peace  is  declared  and  neutrality  is  no 
longer  a  commanding  trade  asset. 

The  increase  in  exports  has  been  confined  largely  to  products 
which  are  directly  dependent  upon  the  European  war.  Thus, 
exports  of  foodstuffs  jumped  from  $429,956,000  in  1914  to 
$902,352,000  in  the  fiscal  year  1915 ;  war  munitions,  other  than 
big  guns,  which  are  not  listed,  from  $8,127,000  to  $50,027,000; 
war  supplies,  such  as  horses,  mules,  harness,  saddles,  aeroplanes, 
commercial  automobiles  and  tires,  wagons,  gas  oil,  fuel  oil, 
barbed  wire,  horseshoes,  and  surgical  appliances  from  $28,993,000 
to  $169,520,000;  materials  for  making  munitions,  such  as  spelter, 
lead,  brass  and  brass  manufactures,  wire  rods,  steel  billets,  lathes 
to  be  used  in  making  shrapnel,  and  sulphuric  acid  from 
$36,688,000  to  $132,209,000;  hides,  leather  and  foot  wear  from 
$39,476,000  to  $70,014,000;  forage,  such  as  oats,  hay,  cottonseed 
cake  and  meaf  from  $1,585,000  to  $78,367,000;  and  textile  manu- 
factures from  $56,257,000  to  $99,301,000. 

The  temporary  nature  of  most  of  these  exports  is  obvious. 
One  of  the  cleanest-cut  tendencies  of  the  export  trade  since  the 
close  of  the  nineteenth  century  had  been  the  relative  and  absolute 
decline  in  the  exports  of  breadstuffs,  meat  animals,  and  in  late 
years  also  of  meat  products,  and  it  is,  therefore,  entirely  unlikely 
that  the  sudden  increase  in  such  exports  will  continue  perma- 
nently after  the  war  prices  come  to  an  end,  and  Russian  and 
other  food  supplies  again  become  available.  Food  exports  now 
include  such  articles  as  sugar,  which  can  scarcely  hope  to  hold 
the  European  market  permanently  in  competition  with  European 
beet  sugar.  The  increased  foreign  sales  of  textiles  and  of  hides, 
leather  and  footwear  were  also  due  almost  entirely  to  the  unusual 
temporary  demand  in  Europe,  which  normally  is  not  a  large 
market  for  American  wares  of  this  kind.  That  the  shipment  of 
huge  quantities  of  forage  to  Europe  is  temporarily  brought  about 
by  the  war  is  undoubted,  a  goodly  portion  being  consumed  by 
the  American  horses  and  mules  which  have  been  shipped  to 
Europe  since  the  war  began.  The  temporary  nature  of  the 
exports  of  munitions,  war  supplies  and  munition  materials  are 


62  SELECTED  ARTICLES 

obvious.  Not  even  the  prayers  of  those  who  are  profiting  from 
the  manufacture  of  such  wares  can  continue  their  exportation 
permanently  when  the  slaughter  in  Europe  ceases. 

There  has  been  no  amazing  increase  in  such  of  the  staple 
exports  of  the  United  States  as  are  not  dependent  upon  a  war 
demand,  and  many  of  them  declined  during  the  fiscal  year  1915. 
The  value  of  cotton  exports  declined  by  $234,257,000;  that  of  iron 
and  steel  and  manufactures  thereof,  even  including  increasing 
items  such  as  barbed  wire  and  shrapnel  lathes,  fell  $25,592,000; 
naval  stores  $8,755,000;  mineral  oils  $18,481,000;  leaf  tobacco 
$9,470,000;  lumber  and  wood  manufactures  $53,236,000,  and  ag- 
ricultural implements  $21,661,000.  The  exports  of  phosphate 
rock,  paper,  coal,  tobacco  manufactures  and  electrical  machinery 
likewise  declined,  and  those  of  copper  declined  greatly  when 
Germany,  the  largest  foreign  market  for  American  copper,  was 
closed,  although  in  this  case  the  increased  demand  on  the  part 
of  American  ammunition  plants  resulted  in  larger  domestic  sales. 
There  has  been  some  improvement  during  the  last  few  months 
in  the  shipment  of  some  of  the  exports  which  had  declined  dur- 
ing the  fiscal  year  1915,  but  few  of  them  have  regained  even 
normal  proportions. 

The  extent  to  which  the  early  expectation  regarding  a  per- 
manent increase  in  exports  has  not  materialized  is  further  dis- 
closed by  an  analysis  of  the  destination  of  the  exports  which 
have  been  responsible  for  the  temporary  advance.  Although  the 
proportion  of  total  exports  shipped  to  Europe  had  steadily  fallen 
since  1900,  because  agricultural  exports  other  than  cotton  and 
leaf  tobacco  were  declining  and  manufactures  found  their  chief 
foreign  markets  elsewhere,  the  exports  to  Europe  during  the 
fiscal  year  1915  suddenly  sprang  from  $1,486,499,000  to 
$1,971432,000,  and  from  62.8  to  71.2  per  cent  of  the  total  export 
trade.  The  exports  to  all  of  the  remaining  continental  trade 
divisions,  except  Africa,  declined,  although  large  increases  had 
been  predicted.  Those  to  North  American  countries  fell  from 
$528,645,000  to  $477,081,000,  the  only  exceptions  of  importance 
being  Cuba  and  Santo  Domingo.  Those  to  South  America  fell 
from  $124,539,000  to  $99,324,000,  Venezuela  being  the  only  im- 
portant exception.  Those  to  Asia,  aside  from  the  shipments  to 
Asiatic  Russia  which  were  destined  to  Europe,  declined  from 
$112,211,000  to  $91,114,000;  and  the  exports  to  Australasia  fell 
from  $83,568,000  to  $77,764,000.  Much  improvement  has  occurred 


AMERICAN   MERCHANT   MARINE  63 

in  some  of  the  non-European  markets  during  the  last  few  months 
of  the  fiscal  year  and  since  then,  particularly  in  the  South  Amer- 
ican countries,  but  the  effects  of  the  war  period  as  a  whole 
have  been  disappointing  so  far  as  the  exports  to  non-European 
markets  are  concerned. 

It  is  true  that  our  exports  to  some  of  the  neutral  countries  of 
Europe  have  increased,  particularly  those  to  Denmark,  Sweden, 
Norway,  Holland  and  Greece.  Yet  these  trade  increases  will  be 
no  more  lasting  than  those  to  the  belligerents  whose  trade  routes 
have  not  been  closed,  for  they  consist  mainly  of  foodstuffs  and 
other  products  normally  obtained  in  large  part  from  sources 
which,  because  of  the  closing  of  the  Dardanelles  and  Baltic  and 
the  prior  needs  of  the  belligerents,  are  temporarily  not  avail- 
able. The  trade  with  the  neutral  countries  of  Europe  would 
have  been  even  larger  but  for  the  persistent  interference  with 
American  trade  and  shipping  by  the  belligerents,  contrary  to 
international  law  as  understood  by  the  United  States  government. 
The  almost  complete  cessation  of  the  direct  trade  with  Germany 
has,  moreover,  led  to  the  use  of  substitutes,  which  may  or  may 
not  result  in  a  permanent  shrinkage  in  the  demand  for  exports 
such  as  copper,  cotton,  gasoline  and  phosphate  rock. 

Instead  of  being  jubilant  over  a  huge  excess  of  total  exports 
over  imports,  it  is  more  significant  to  note  that  in  the  trade  with 
non-European  markets  there  was  an  excess  of  imports  and  that 
it  grew  from  $120,242,000  in  1914  to  $262,657,000  in  1915.  To 
maintain  permanently  an  excess  of  total  exports  such  as  has 
resulted  from  the  growing  export  and  declining  import  trade 
with  Europe  since  the  war  began  is  manifestly  impossible  under 
present  conditions.  It  has  occasioned  one  loan  of  $500,000,000 
and  others  may  follow.  Perhaps  it  is  not  out  of  place  to  suggest 
that  if  similar  financial  assistance  had  been  extended  to  some 
of  the  countries  of  South  America  and  elsewhere  trade  gains  of 
a  more  lasting  variety  would  have  resulted. 

If  the  war  should  continue  to  rage  for  a  long  time  to  come 
and  the  progress  which  has  very  recently  been  made  by  Amer- 
ican exporters  in  some  of  the  non-European  markets  should  be- 
come more  far-reaching,  something  of  permanent  value  may  still 
be  acomplished.  Otherwise  when  peace  returns,  the  policy  of 
preferring  huge  temporary  war  profits  will  leave  the  foreign 
trade  with  these  markets  about  where  it  was  before  the  war 
began.  Indeed  the  American  exporter  may  find  it  more  difficult 


64  SELECTED   ARTICLES 

than  ever  to  capture  his  full  share  of  trade  in  the  competitive 
markets  of  the  world,  for  his  English,  German  and  French  rivals 
will  doubtless  make  a  supreme  effort  to  regain  any  markets 
which  were  temporarily  lost.  Those  who  at  one  time  believed 
that  some  of  our  great  European  competitors  would  be  com- 
pletely crushed  by  their  military  enemies  must  see  that  after 
over  fifteen  months  of  struggle  there  are  as  yet  no  indications 
of  such  a  result.  They  will  all  be  there  when  peace  is  declared, 
and  their  aim  will  be  to  retake  at  almost  any  cost  such  markets 
as  they  have  lost.  Foreign  markets  for  manufactures  are  a  mat- 
ter of  commercial  life  or  death  to  Great  Britain  and  Germany; 
and  to  whatever  extent  they  may,  in  their  hatred  for  each  other, 
hesitate  to  re-establish  mutual  trade  relations,  to  that  extent  will 
they  be  obliged  to  seek  greater  foreign  markets  elsewhere. 

May  the  United  States  make  hay  in  South  America  and  other 
much-sought  markets  while  the  sun  does  not  shine  in  Europe,  so 
as  to  be  able  to  withstand  the  severe  competition  which  is  likely 
to  arise.  Confronted  by  higher  costs  of  production  at  home,  for 
the  wage  advances  which  the  war  has  occasioned  will  become  a 
problem  after  war  orders  cease  to  come,  the  position  of  the 
United  States  in  the  competitive  foreign  markets  of  the  world 
will  be  none  too  bright.  As  regards  the  Chinese  market,  more- 
over, it  is  uncertain  whether  in  the  light  of  recent  occurrences 
the  open  door  policy  which  has  long  been  supported  by  the 
United  States  will  be  fully  maintained  in  the  future.  It  is  for 
these  reasons  that  the  establishing  of  effective  banking  and  credit 
facilities,  trade  machinery,  steamship  lines,  and  investment  rela- 
tions during  the  war  would  in  later  years  be  an  unmixed  blessing 
to  American  exporters  and  importers.  The  establishment  of 
such  facilities  would  give  to  them  a  far  better  opportunity,  not 
only  to  retain  a  portion  of  their  rivals'  business,  but  to  develop 
new  trade  in  the  future. 

What  has  been  accomplished  in  increasing  the  vessel  tonnage 
registered  under  the  flag  of  the  United  States  is  gratifying,  for 
over  five  hundred  thousand  tons  of  the  increase  represent  ton- 
nage which  formerly  operated  under  foreign  flaps.  It  has  not, 
however,  prevented  a  severe  shortage  in  available  commercial 
tonnage.  A  large  number  of  enemy  ships  are  interned  in  the 
ports  of  the  belligerents  and  of  neutral  countries;  many  have 
been  destroyed;  some  have  been  requisitioned  for  military  uses; 
the  free  movement  of  others  has  been  interfered  with  by  de- 


AMERICAN   MERCHANT   MARINE  65 

tention  at  British  and  French  ports;  and  meanwhile  British  ship- 
yards, which  are  the  principal  source  of  the  world's  deep-sea 
tonnage,  have  because  of  their  larger  use  for  military  and  naval 
purposes,  greatly  reduced  their  current  output  of  merchant  ton- 
nage. American  shipyards  report  an  extraordinary  volume  of 
new  orders,  but  most  of  them  do  not  call  for  delivery  before  the 
last  quarter  of  the  year  1916  or  the  first  half  of  1917. 

This  shortage  in  merchant  tonnage,  accompanied  by  frequent 
delays  at  European  ports  and  by  an  unusually  large  volume  of 
foreign-bound  freight  is  chiefly  responsible  for  the  unprecedented 
rise  in  ocean  freight  rates  which  has  occurred.  In  the  trade 
with  European  countries  present  freight  rates  average  from  five 
to  six  times  the  rates  which  prevailed  before  the  war  began,  and 
in  other  parts  of  the  world,  although  far  removed  from  the  bat- 
tlefields, they  also  average  from  three  to  four  times  the  rates 
which  were  formerly  charged.  The  increase  of  our  registered 
merchant  fleet,  moreover,  may  not  prove  to  be  a  permanent  in- 
crease unless  speedy  action  is  taken  by  Congress  with  a  view  to 
making  it  commercially  possible  to  remain  under  the  American 
flag  during  times  of  peace.  The  beneficial  effects  of  the  amended 
ship-registry  act  of  1914  are  partly,  at  least,  counteracted  by  the 
Seamen's  Act  of  March  1915,  which  further  increases  the  oper- 
ating costs  of  American  ships  as  compared  with  those  of  vessels 
operating  under  foreign  flags.  Whether  or  not  the  sale  of  its 
fleet  by  the  Pacific  Mail  Steamship  Company  was  due  entirely 
to  this  statute  and  to  the  clause  in  the  Panama  Canal  Act  which 
prohibits  railroad  vessels  from  using  the  canal  is  immaterial. 
Their  sale  was  undoubtedly  encouraged  by  these  statutes,  as  was 
also  the  transfer  of  various  additional  American  vessels  to  for- 
eign flags  and  to  Canadian  terminals.  The  trade  between  the 
Pacific  coast  of  the  United  States  and  China  has  been  needlessly 
burdened  by  an  acute  shortage  in  tonnage,  which,  unless  it  is 
remedied  soon,  is  likely  to  have  effects  difficult  to  overcome  in 
the  future. 

While  little  has  thus  far  been  accomplished  during  the  war 
in  furtherance  of  the  country's  future  foreign  commerce,  and 
the  effects  of  the  war  from  this  viewpoint  have  been  disappoint- 
ing, something  has  in  fact  been  accomplished:  (i)  The  exports 
from  the  United  States  to  the  non-European  markets  have  in 
recent  months  begun  to  increase,  and  some  of  the  trade  which 
was  formerly  conducted  by  Europe  is  being  transferred  to  the 


66  SELECTED   ARTICLES 

United  States;  (2)  a  beginning  has  been  made  in  the  establish- 
ment of  American  branch  "banks  in  Latin- America,  three  having 
been  established  in  Brazil,  one  in  Argentina,  one  in  Uruguay  and 
one  in  Cuba;  (3)  the  American  deep-sea  merchant  fleet  has, 
temporarily  at  least,  been  largely  augmented ;  and  (4)  the  serious 
embarrassment  of  commerce  resulting  from  the  lack  of  sufficient 
ocean-going  vessels,  and  the  difficulties  incident  to  the  transfer  to 
the  American  flag  of  vessels  which  were  formerly  owned  by  for- 
eign capital,  has  emphasized  the  desirability  of  a  larger  American 
merchant  marine  as  nothing  else  had  ever  succeeded  in  doing. 

A  program  which  looks  to  the  future  growth  of  foreign  com- 
merce, to  the  permanent  retention  of  such  vessels  as  have  regis- 
tered under  the  American  flag,  and  to  the  further  increase  of 
the  merchant  marine,  is  doubtless  of  more  interest  than  criticism 
of  the  general  course  which  has  thus  far  been  pursued  since  the 
European  war  began.  The  abnormal  war  trade  with  Europe  has 
been  preferred  because  the  immediate  profits  which  it  promised 
were  immense,  but  that  attention  will  swing  back  to  normal  trade 
channels  after  peace  returns,  if  not  sooner,  is  scarcely  subject  to 
doubt. 

To  further  these  aims,  it  is  believed  that  the  merchant  marine 
engaged  in  the  foreign  trade  should  be  encouraged  in  three 
ways:  (i)  negatively  by  revising  the  navigation  laws,  a  revision 
which  may  well  begin  by  amending  section  13  of  the  Seamen's 
Act  so  as  to  eliminate  the  language  test  and  the  minimum  per- 
centages of  able  seamen  among  the  deck  crew ;  and  (2)  positively 
by  subsidizing  a  limited  number  of  steamship  lines  in  the  South 
American,  Oriental,  Australasian  and  South  African  trades  so  as 
to  make  it  possible  for  them  to  render  a  service  equal  in  quality 
to  that  which  is  enjoyed  by  European  exporters  and  importers. 
Something  more  than  the  revision  of  the  navigation  laws  is  nec- 
essary, for  such  revision  could  not  and  ought  not  to  be  so  severe 
as  to  eliminate  the  full  difference  between  the  operating  costs  of 
American  and  foreign  vessels.  Funds  paid  to  a  limited  number 
of  lines  operating  under  definite  government  contracts  which  re- 
quire a  service  of  agreed  frequency,  rapidity,  and  general  excel- 
lence would  do  much  to  enable  the  American  exporter  of 
manufactured  wares  more  readily  to  compete  in  the  most  prom- 
ising of  the  world's  markets.  The  experience  of  foreign  coun- 
tries has  made  it  clear  that  subsidies  paid  under  contract  make 
possible  steamship  services  better  than  the  traffic  of  the  moment 


AMERICAN   MERCHANT   MARINE  67 

warrants,  the  subsidized  vessels  acting  as  a  means  of  promoting 
trade — as  trade  pioneers  and  not  only  as  transportation  vehicles. 
The  appointment  of  a  federal  shipping  board  to  make  detailed 
recommendations  as  to  the  revision  of  the  navigation  laws  and 
to  administer  the  subsidy  policy  so  as  to  guarantee  its  effective 
application  would  do  much  to  promote  the  future  trade  and 
shipping  of  the  United  States.  Assistance  of  this  kind  would 
do  more  to  build  up  an  American  merchant  marine  than  the 
policy  of  government  ownership  of  steamships.  Such  a  policy 
would  have  a  discouraging  effect  upon  private  steamship  com- 
panies and  would  probably  in  the  long  run  tend  to  check  rather 
than  promote  the  growth  of  American  shipping.  It  is  doubtful, 
moreover,  whether  in  the  absence  of  private  incentive  the  gov- 
ernment-owned vessels  would  be  operated  as  efficiently  as  gov- 
ernment-subsidized but  privately  owned  steamship  lines.  The 
most  effective  sphere  of  government  activity  is  to  regulate  and 
assist  rather  than  to  undertake  the  actual  operation  of  merchant 
vessels.  (3)  American  vessels  and  their  cargoes  should  be  pro- 
tected against  foreign  seizure  or  detention  to  the  full  extent  that 
international  law  permits.  The  value  of  this  protection  may 
seem  less-  permanent  than  the  other  remedies  which  have  been 
suggested,  because  vessels  and  cargoes  are  seized  or  detained 
only  when  nations  are  at  war ;  but  who  can  tell  how  long  the 
present  conflict  will  continue,  and  what  guarantee  is  there  that 
others  will  not  occur  in  the  future?  The  enforcement  of  the 
policy  regarding  the  "freedom  of  the  seas"  as  announced  in  the 
note  addressed  to  Great  Britain  on  October  21,  is  essential  to 
the  maximum  growth  of  American  shipping  and  foreign  com- 
merce. 

The  legislative  program  might  also  include  a  modification  of 
the  anti-trust  statutes  in  such  a  way  as  to  permit  industrial 
or  commercial  concerns  to  combine  in  the  conduct  of  their  export 
trade.  Small  as  well  as  large  American  concerns  could  then 
more  readily  obtain  a  fair  share  of  the  foreign  trade;  joint 
marketing  organizations  could  be  more  readily  developed;  and 
competition  could  be  directed  against  foreign  competitors  in- 
stead of  against  domestic  rivals. 

When  unwise  legal  restrictions  have  been  removed  and  ade- 
quate steamship  facilities  have  been  provided,  it  then  behooves 
the  private  interests  engaged  in  the  foreign  trade  to  promote 
their  foreign  transactions  in  every  way  that  they  legitimately 


68  SELECTED   ARTICLES 

can.  These  interests  include  not  only  the  manufacturers  and 
other  producers,  and  the  various  types  of  export  and  import 
merchants,  but  also  the  country's  banks  and  the  investing  public. 
The  establishing  of  foreign  branch  banks  greatly  facilitates 
international  settlements  and  the  extension  of  needed  credits, 
and  should  also  do  much  to  encourage  the  foreign  investment  of 
American  capital.  That  foreign  trade  follows  investment  has 
become  a  trade  axiom.  As  was  stated  by  the  chief  of  the  bureau 
of  foreign  and  domestic  commerce,  which  aims  to  assist  in  the 
development  of  the  foreign  trade,  "It  is  only  through  the  in- 
vestment of  capital  that  foreign  trade  can  be  secured  and  held. 
If  the  United  States  is  serious  in  her  desire  to  develop  foreign 
trade,  she  must  lend ;  she  must  invest ;  she  must  buy  foreign 
securities." 

Considerable  sums  of  American  money  have  been  invested  in 
Canada,  in  Mexico,  in  the  Central  American  countries,  and  in 
some  of  the  West  India  Islands  and  it  is  not  a  mere  coincidence 
that  our  relative  trade  position  has  been  stronger  there  than 
in  South  American  and  Oriental  countries.  In  South  America 
and  elsewhere  the  investment  of  American  money  has  made 
but  a  bare  beginning  in  comparison  with  what  has  been  done 
by  British  and  German  investors.  To  increase  our  exports  per- 
manently it  is  necessary  that  extensive  investments  be  made  in 
the  newer  countries  of  the  world;  the  railroads,  street  railways, 
mines,  ranches,  land  companies,  and  other  industries  so  financed 
will  then  encourage  the  purchase  of  American  exports,  just  as 
British,  German  and  other  European  investments  have  fostered 
the  foreign  trade  of  Europe.  Moreover,  investments  abroad  are 
essential  to  stabilize  international  exchange,  for  if  the  exports 
of  the  United  States  are  to  increase  rapidly  something  must  be 
done  to  balance  the  country's  excess  of  exports  over  imports. 
I  do  not  refer  to  the  impossible  temporary  excess  which  exists 
at  present,  but  to  a  safe  and  sane  balance  such  as  would  probably 
result  from  the  normal  increase  of  the  export  trade  in  times 
of  peace.  This  can  be  done  in  part  by  an  increase  in  imports, 
but  assuredly  it  is  not  the  intention  of  American  exporters  to 
be  governed  solely  by  the  purchase  of  foreign  commodities.  The 
excess  of  exports  can  also  be  covered  in  part  by  the  repurchase 
of  American  securities  now  held  in  Europe,  although  the  relief 
so  afforded  would  last  only  until  liquidation  is  completed.  The 
ultimate  solution  is  the  purchase  of  foreign  securities — the  invest- 
ment and  reinvestment  of  American  capital  in  the  countries 


AMERICAN   MERCHANT   MARINE  69 

where  it  is  hoped  to  find  the  largest  foreign  markets  for  Ameri- 
can exports.  International  trade  in  securities  and  in  commodities 
goes  hand  in  hand,  and  particularly  is  this  the  case  in  those 
commercially  undeveloped  countries  whose  trade  the  United 
States  is  anxious  to  acquire. 


GOVERNMENT  OWNERSHIP :    PRIVATE  OWN- 
ERSHIP1 

War's  revelation  of  the  disadvantage  of  the  almost  complete 
dependence  of  United  States  foreign  commerce  upon  carriers 
under  belligerent  flags  stimulated  sentiment  for  national  policy 
effective  to  upbuild  the  foreign-going  merchant  fleet  of  the 
republic.  Many  proposals  have  been  advanced.  They  divide 
into  three  classes :  government  ownership  and  operation ;  gov- 
ernment aid  in  the  form  of  subsidies  or  guarantee  of  bonds  of 
shipping  enterprises ;  and  the  complete  removal  of  all  legislative 
restrictions  to  the  end  that  the  American  merchant  fleet  may 
build  itself  up  by  free  and  economic  competition  in  world  trade. 

Government  Ownership  and   Operation 

On  September  4,  1914,  Representative  J.  W.  Alexander,  chair- 
man of  the  Committee  on  Merchant  Marine  and  Fisheries  of  the 
House  of  Representatives,  introduced  a  bill  (H.  R.  1866),  provid- 
ing for  government  ownership  and  operation  of  merchant  vessels 
in  the  foreign  trade  of  the  United  States.  This  bill  had  the 
approval  of  the  Wilson  administration  and  represented  its  policy 
for  the  relief  of  the  situation  caused  by  the  partial  collapse  of 
ocean  transportation  on  account  of  war  and  for  upbuilding  the 
American  merchant  marine. 

The  bill,  somewhat  amended,  was  passed  by  the  House,  but 
firm  antagonism  to  the  principle  of  government  ownership  pre- 
vented its  coming  to  a  vote  in  the  Senate,  although  it  was  long 
and  vigorously  debated.  Party  lines  were  broken,  certain  Demo- 
cratic Senators  opposing  the  bill.  When  the  Sixty-third  Con- 
gress adjourned  sine  die  on  March  4,  the  bill  was  dead.  During 
the  recess  and  before  the  meeting  of  the  Sixty-fourth  Congress, 
it  was  made  known  in  Washington  that  the  administration  would 
again  press  the  government  ownership  policy. 

1  Ocean  Shipping,  p.  93-118.  Copyright,  1915,  by  the  National  For- 
eign Trade  Council. 


70  SELECTED   ARTICLES 

First  Bill  Fails  in  Sixty-third  Congress 

The  government  ownership  bill  was  variously  urged  as  a  relief 
measure  and  as  a  permanent  policy  but  can  perhaps  best  be 
described  in  the  terms  of  a  substitute  bill  introduced  in  the 
Senate  on  January  26,  1915,  by  Senator  Duncan  U.  Fletcher  in 
behalf  of  the  Committee  on  Commerce  and  on  which  the  Senate 
became  deadlocked. 

The  bill  proposed  that  the  policy  of  government  ownership 
and  operation  should  be  carried  out  by  a  Shipping  Board,  con- 
sisting of  the  Secretary  of  the  Treasury,  the  Secretary  of  Com- 
merce and  three  additional  members,  two  of  whom  should  be 
of  practical  experience  in  the  management  and  operation  of 
steamships  in  the  foreign  trade,  which  board  should  subscribe 
to  51  per  cent  of  the  capital  stock  of  a  corporation  to  be  organ- 
ized by  it  under  the  laws  of  the  District  of  Columbia. 

It  was  provided  that  the  corporation  should  "have  for  its 
object  the  purchase  construction,  equipment,  maintenance  and 
operation  of  merchant  vessels  to  meet  the  requirements  of  the 
foreign  commerce  of  the  United  States,  or  to  charter  vessels  for 
such  purposes,  and  to  make  charters  or  leases  of  any  vessel  or 
vessels  owned  by  such  corporation  to  any  other  corporation, 
organized  under  the  laws  of  a  state,  a  majority  of  the  stock 
being  owned  by  citizens  of  the  United  States,  firm  or  individual, 
citizen  or  citizens  of  the  United  States,  to  be  used  for  such 
purposes,  and  shall  have  power  to  carry  out  said  objects  and 
purposes:  Provided,  That  the  terms  and  conditions  of  such 
charter  parties  shall  first  be  approved  by  the  Shipping  Board,  the 
initial  capital  stock  of  which  corporation  shall  not  be  over 
$io,ooo;ooo,  of  the  par  value  of  $100  per  share." 

It  was  also  provided  that  the  stock  owned  by  the  United 
States  should  be  voted  by  the  Shipping  Board,  that  the  United 
States  should  never  hold  less  than  51  per  cent  of  the  stock  of 
the  corporation  and  that  the  stock,  so  long  as  the  United  States 
owned  it,  should  be  free  from  all  public  taxes. 

Method  of  Operation 

The  creation  of  the  government  owned  and  operated  fleet 
was  sought  through  the  issue  of  Panama  Canal  bonds  to  a  total 
amount  not  to  exceed  $30,000,000  for  the  purpose  of  purchasing 
or  constructing  vessels. 

The  operation  and  financing  of  this  government  owned  fleet 


AMERICAN   MERCHANT   MARINE  71 

was  described  in  Section  3,  which  provided  that  the  vessels  so 
constructed  were  to  be  operated  by  corporations  in  which  the 
United  States  had  become  a  stockholder,  the  government  being 
secured  by  a  first  mortgage  lien  upon  the  vessels  and  by  4  per 
cent  gold  bonds  of  such  corporations.  Unless  the  vessels  bought 
or  chartered  by  the  Shipping  Board  should  have  been  built  in  the 
United  States,  they  were  not  to  be  permitted  to  engage  in  coast- 
wise trade. 

Section  7  provided  that  with  the  approval  of  Congress,  the 
Shipping  Board  might  sell  the  stock  owned  by  the  United  States. 

Section  8  provided  that  naval  auxiliaries  suitable  for  com- 
mercial use  and  not  required  by  the  navy  in  peace,  and  similar 
vessels  belonging  to  the  War  Department,  and  those  owned  and 
operated  by  the  Panama  Railroad  Company,  might  be  chartered 
or  leased  or  transferred  to  the  government  corporation  proposed 
to  be  created. 

Section  9  provided  authority  for  the  President  to  use  any  of 
the  ships  owned,  leased  by,  or  otherwise  in  the  possession  of  the 
government  corporation,  as  naval  auxiliaries,  at  a  reasonable 
price. 

Shipping  Bill  Reintroduced 

On  January  31,  1916,  Mr.  J.  W.  Alexander,  chairman  of  the 
Committee  on  the  Merchant  Marine  and  Fisheries  of  the  House 
of  Representatives,  introduced  a  new  government-shipping  bill 
(H.  R.  10,500).  On  May  9  the  majority  of  the  Merchant  Marine 
Committee  favorably  reported  as  a  substitute  H.  R.  15,455, 
described  below. 

Substitute  Shipping  Bill  (H.  R.  15,455} 

On  May  8,  1916,  Mr.  Alexander,  chairman  of  the  Merchant 
Marine  Committee,  introduced  in  the  House  a  substitute  bill 
representing  the  committee's  work  on  the  two  previous  bills, 
H.  R.  10,500  and  H.  R.  14,337,  which  new  bill  was  introduced 
to  replace. 

The  new  measure  (H.  R.  15,455)  opens  with  a  definition  of 
the  term  "common  carrier"  and  stipulates  that  no  corporation, 
partnership,  or  association  shall  be  deemed  a  citizen  of  the 
United  States  "unless  the  controlling  interest  therein  is  owned 
by  citizens  of  the  United  States,  and,  in  the  case  of  a  corpora- 
tion, unless  its  president  and  managing  directors  are  citizens  of 


72  SELECTED   ARTICLES 

the  United  States  and  the  corporation  itself  is  organized  under 
the  laws  of  the  United  States,  or  of  a  state,  territory,  district, 
or  possession  thereof." 

Sections  2  and  4  deal  with  the  organization  of  the  Shipping 
Board,  which  is  to  be  composed  of  the  Secretary  of  the  Navy 
and  Secretary  of  Commerce  as  members  ex-officio,  and  five  com- 
missioners to  be  selected  and  appointed  by  the  President,  who 
shall  be  selected  with  due  regard  to  their  fitness  and  to  a  fair 
representation  of  the  geographical  divisions  of  the  country. 
Not  more  than  three  commissioners  shall  be  of  the  same  political 
party,  no  commissioner  shall  be  in  the  employ  of  or  hold  any 
official  relation  to  any  common  carrier  subject  to  the  provisions 
of  the  act,  nor  be  engaged  actively  in  any  other  business  or 
employment.  The  salaries  of  the  commissioners  are  to  be  $10,000 
per  annum. 

The  board  is  authorized  (Section  5)  to  have  constructed 
in  American  yards  and  navy  yards  or  elsewhere  (giving  prefer- 
ence, other  things  being  equal,  to  domestic  yards),  or  to  pur- 
chase, lease  or  charter  vessels  suitable,  as  far  as  the  commercial 
requirements  of  the  marine  trade  of  the  United  States  may 
permit,  for  use  as  naval  auxiliaries  or  army  transports,  or  for 
other  naval  or  military  purposes. 

Section  6  authorizes  the  President  to  transfer  to  the  board 
vessels  not  in  use  by  the  army  and  navy,  and  also  vessels  of  the 
Panama  Railroad  Company  not  required  for  its  business. 

Sections  7  and  8  allow  the  board  to  charter,  lease  or  sell  to 
any  person  a  citizen  of  the  United  States,  any  vessel  so  pur- 
chased, constructed,  or  transferred.  When  vessels  belonging  to 
the  board  become  unfit  for  use  they  may  be  sold  at  public  or 
private  sale  free  from  the  conditions  and  restrictions  of  this 
act. 

Under  Section  9  vessels  purchased,  chartered  or  leased  from 
the  board  may  be  registered  or  enrolled  and  licensed  as  vessels 
of  the  United  States,  with  the  proviso  that  foreign-built  vessels 
heretofore  or  hereafter  admitted  under  the  Act  of  August  18, 
1914,  or  under  this  act,  and  vessels  owned,  chartered,  or  leased 
by  any  corporation  in  which  the  United  States  is  a  stockholder 
(except  the  Panama  Railroad  Company)  may  not  engage  in  the 
coastwise  trade  of  the  United  States,  except  that  such  vessels 
may  engage  in  trade  with  Alaska,  Hawaii  or  Porto  Rico,  whether 
or  not  en  route  to  or  from  a  foreign  port,  if  the  board  finds 


AMERICAN    MERCHANT   MARINE  73 

any  such  trade  is  not  being  adequately  served  by  a  regular  line 
or  lines.  Such  vessels  while  employed  as  merchant  vessels  shall 
be  subject  to  all  laws,  regulations  and  liabilities  governing 
merchant  vessels,  whether  the  United  States  be  interested  therein 
as  owner,  in  whole  or  in  part,  or  hold  any  mortgage,  lien,  or 
other  interest  therein.  No  such  vessel,  without  the  approval  of 
the  board,  shall  be  transferred  to  a  foreign  registry  or  flag  or 
sold ;  nor,  except  under  regulations  prescribed  by  the  board,  be 
chartered  or  leased. 

In  case  of  war  no  American  vessel  may  be  sold  or  chartered 
to  foreigners  except  by  permission  of  the  board.  Failure  to 
observe  these  rules  entails  forfeiture  of  vessel  to  the  United 
States  and  a  fine  of  not  more  than  $5,000,  or  imprisonment  of 
not  more  than  five  years,  or  both. 

In  Section  10  provision  is  made  for  taking  over  vessels  in 
time  of  war  or  national  emergency  in  the  usual  manner  by 
appraisal. 

The  board  is  authorized  by  Section  n  to  form  one  or  more 
corporations  for  the  purchase,  construction,  equipment,  lease, 
charter,  maintenance  and  operation  of  merchant  vessels  in  the 
commerce  of  the  United  States.  Total  capital  stock  not  to  exceed 
$50,000,000.  At  the  expiration  of  five  years  from  the  conclusion 
of  the  present  European  war  the  operation  of  vessels  on  the 
part  of  any  corporation  organized  by  the  board  shall  cease  and 
the  said  corporation  stand  dissolved.  The  vessels  and  other 
property  shall  revert  to  the  board,  and  it  may  sell,  lease  or  char- 
ter such  vessels  and  deposit  proceeds  in  Treasury  to  its  credit. 
Stock  of  such  dissolved  corporations  to  be  taken  over  by  board 
at  a  fair  and  reasonable  value. 

Section  12  provides  for  the  taking  over  of  vessels  operated 
by  the  board  as  naval  auxiliaries. 

Under  Section  13  the  Shipping  Board  is  charged  with  the  duty 
of  investigating  the  relative  cost  of  building  vessels  in  the  United 
States  and  in  foreign  maritime  countries,  as  well  as  the  relative 
cost  and  disadvantages  in  operation.  It  is  to  study  the  navigation 
laws  and  regulations  thereunder  and  make  recommendations  to 
Congress  for  the  amendment,  improvement  and  revision  of  such 
laws  and  for  the  development  of  the  merchant  marine.  It  is  to 
investigate  the  legal  status  of  mortgage  loans  on  vessel  property, 
with  a  view  to  means  of  improving  the  security  of  such  loans 
and  of  encouraging  investment  in  American  shipping. 


74  SELECTED  ARTICLES 

Section  14  authorizes  the  issue  of  Panama  Canal  bonds  not  to 
exceed  $50,000,000  for  the  purpose  of  conducting  the  operations 
of  the  Shipping  Board.  (Under  Section  35  $100,000  is  appro- 
priated for  the  preliminary  expenses  of  the  board  during  the 
fiscal  year  to  June  30,  1917.) 

Sections  15  to  34,  inclusive,  deal  with  common  carriers,  agree- 
ments among  carriers,  rebating,  filing  of  rates,  etc.  These  sec- 
tions are  substantially  a  repetition  of  the  provisions  of  Bill  H.  R. 
14,337- 

Section  15  forbids  common  carriers  by  water  (i)  to  "pay, 
or  allow,  or  enter  into  any  combination,  agreement,  or  under- 
standing, express  or  implied,  to  pay  or  allow,  a  defered  rebate 
to  any  shipper" ;  (2)  using  a  fighting  ship,  either  separately  or 
in  conjunction  with  any  other  carrier,  through  agreement  or 
otherwise;  (3)  to  retaliate  against  any  shipper  by  refusing  space 
accommodation  when  such  is  available,  because  such  shipper  has 
patronized  another  carrier  or  has  filed  a  complaint  charging 
unfair  treatment,  or  for  any  other  reason;  (4)  making  any  un- 
fair discrimination  with  any  shipper  based  on  the  volume  offered, 
either  in  the  matter  of  despatch,  proper  loading  or  adjustment 
and  settlement  of  claims.  Violations  of  any  of  these  counts  is 
punishable  by  a  fine  of  not  more  than  $25,000  for  each  offense! 

Section  16  requires  common  carriers  by  water  or  other  per- 
sons subject  to  this  act  (i)  to  file  with  the  board  a  copy,  or,  if 
oral,  a  true  memorandum,  of  any  agreement  with  another  carrier 
concerning  rates,  accommodation,  pooling,  apportionment  of  earn- 
ings, losses,  sailing  agreements,  etc.;  (2)  the  board  may  dis- 
approve, cancel  or  modify  such  agreements  if  it  finds  them  dis- 
criminatory as  between  carriers  or  shippers,  or  detrimental  to 
the  commerce  of  the  United  States;  (3)  agreements  existing 
at  the  time  of  organization  of  the  board  shall  be  lawful  until 
disapproved,  but  new  agreements  (4)  are  unlawful  except  when 
approved,  all  such  agreements  (5)  being  exempt  from  the  terms 
of  the  Anti-trust  Acts  of  June  2,  1890,  and  August  27,  1804, 
and  amending  acts;  (6)  violations  of  any  provisions  of  this 
section  are  punishable  by  a  fine  of  $1,000  for  each  offense. 

Section  17  forbids  common  carriers  (i)  to  discriminate  in 
favor  of  locality,  person  or  particular  traffic;  (2)  to  give  trans- 
portation at  less  than  regular  rate  by  false  billing,  classification, 
etc.;  (3)  to  influence  marine  insurance  underwriters  against  a 
competing  carrier. 


AMERICAN   MERCHANT   MARINE  75 

Section  18  binds  carriers  to  such  rates  as  are  not  prejudicial 
to  American  exporters  as  compared  with  their  foreign  competi- 
tors. The  board  is  authorized  to  correct  such  discrimination  and 
to  prescribe  just  and  reasonable  practices  relating  to  receiving, 
handling,  storing  or  delivering  property. 

Sections  19  and  20  relate  to  common  carriers  in  interstate 
commerce. 

Section  21  forbids  the  giving  of  information  by  the  carriers 
which  may  be  used  to  the  detriment  of  a  shipper's  business, 
except  under  legal  process. 

Section  22  defines  the  powers  of  the  board  with  regard  to  the 
filing  of  reports  by  common  carriers.  Failure  to  report  when 
ordered  may  result  in  a  fine  of  $100  for  each  day  of  default, 
and  a  fine  of  $1,000  and  one  year's  imprisonment,  or  both,  may 
be  imposed  for  falsification  or  destruction  of  such  reports. 

Sections  23,  24,  25,  26,  27,  28,  29,  30  and  31  regulate  the  filing 
of  complaints  with  the  board  and  define  the  mode  of  reparation 
for  injuries,  investigations  of  claims,  prosecution  of  delinquents, 
etc.,  while  Section  32  provides  a  fine  of  $5,000  for  violations  of 
the  act  not  otherwise  specified  as  to  penalty.  Section  33  stipu- 
lates this  act  shall  not  be  construed  to  affect  the  jurisdiction  of 
the  Interstate  Commerce  Commission  or  to  apply  to  intrastate 
commerce,  and  Section  34  maintains  the  constitutionality  of  the 
remainder  of  the  act  in  case  any  section  is  declared  unconstitu- 
tional. 


AFFIRMATIVE  DISCUSSION 


WHAT  CONGRESS  HAS  DONE  TO  BUILD  UP  AN 
AMERICAN  MERCANTILE  MARINE1 

The  total  number  of  steamers  owned  by  all  the  nations  of 
the  world  on  June  30,  1914,  was  30,226,  and  the  amount  of 
the  world's  steam  tonnage  was  45,403,877  gross  tons.  Of  this 
there  were  registered  in  the  United  Kingdom  8,587  steamers, 
totaling  18,892,089  tons,  over  40  per  cent  of  the  total  tonnage 
of  the  world.  Under  American  registry  were  1,076,152  tons — a 
little  over  2  per  cent  of  the  whole.  Since  the  outbreak  of  the 
European  war  approximately  9,000,000  tons  of  merchant  shipping, 
about  20  per  cent  of  the  whole,  have  been  destroyed,  captured, 
commandeered  or  otherwise  put  out  of  the  merchant  service. 
The  rates  of  freight  were  never  so  high,  the  profits  of  the  busi- 
ness were  never  so  great,  the  demand  for  tonnage  was  never  so 
insistent  and  pressing  as  now. 

How  will  the  need  be  supplied?  We  are  told  that  private 
capital  is  supplying  it  for  this  country,  and,  as  evidence  of  this, 
our  attention  is  directed  to  the  increase  of  work  in  our  ship- 
yards. Let  us  see  to  what  extent  ships  are  being  built  to  engage 
in  foreign  commerce  and  whether  the  necessities  of  our  situation 
are  being  approached.  Analyze  the  tonnage  under  construction 
in  American  shipyards,  as  recently  reported,  and  you  will  find  it 
comes  substantially  to  this : 

Merchants  Vessels 

30  oil  tankers,   D.  W.   tonnage 264,935 

3  molasses  tankers,  D.  W.  tonnage 17,400 

8  colliers,  D.  W.  tonnage 32,475 

6  lumber  steamers,  D.  W.  tonnage 22,500 

7  combination  freight  and  passenger  steamers,  D.  W.  tonnage..  26,200 
13  freight  steamers,  D.  W.   tonnage 64,800 

1  Address  by  Duncan  U.  Fletcher,  United  States  Senator  from  Florida, 
at  the  dinner  of  the  Academy1  of  Political  Science,  New  York,  November 
j2,  1915,  Printed  in  the  Proceedings.  6:1-27.  October,  1915. 


78  SELECTED  ARTICLES 

62  barges,  lighters,  scows,  etc.,  D.  W.  tonnage  estimated 50,000 

7  sailing  vessels,  D.   W.  tonnage 13,620 

7  tugs,   D.   W.   tonnage 1,500 

2  yachts,  D.   W.  tonnage 1,800 

i  floating  hospital,  D.  W.  tonnage 1,000 

146  Total 496,230 

Five  of  the  oil  tankers,  26,400  tons,  are  being  built  for  foreign 
owners.  Of  the  general  cargo  boats  only  two  are  intended  for 
strictly  foreign  trade,  to  wit:  one  vessel  being  built  for  W.  R. 
Grace  &  Co.,  and  one  for  Hind-Rolph  Coal  and  Navigation  Co., 
although  the  latter  may  be  used  as  a  collier.  This  total  tonnage 
is  14,000.  I  am  considering  the  three  boats  built  for  Munson 
S.  S.  Co.  and  one  for  the  New  York  and  Cuba  S.  S.  Co.,  as 
being  intended  for  the  Cuban  service,  which  is  generally  regarded 
as  coastwise  trade,  although  technically  it  is  foreign.  The  total 
tonnage  of  these  four  boats  would  be  about  18,300  tons.  Two 
of  the  cargo  boats  in  the  list  are  intended  for  the  Great  Lakes, 
two  for  Puget  Sound  and  one  for  Delaware  Bay.  All  the  other 
general  cargo  boats  are  intended  for  the  coastwise  trade  except  a 
9,ooo-ton  vessel  being  built  by  the  Union  Iron  Works  for  their 
own  account,  supposedly  for  speculation.  It  is  very  doubtful  if 
any  material  number  of  the  vessels  built  for  coastwise  trade  could 
be  used  in  the  oversea  trade  because  of  insufficient  bunker  capa- 
city, to  say  nothing  of  other  features  of  their  construction. 

Under  construction  in  American  shipyards  the  total  number 
of  government  vessels  is  81,  of  which  69  are  for  the  United 
States  and  12  are  for  foreign  governments.  The  cost  of  the 
work  being  done  for  the  government  is  far  in  excess  of  the 
cost  of  the  work  being  done  for  private  owners.  In  addition 
to  new  work,  our  shipyards  are  doing  repair  work  on  207  mer- 
chant vessels  of  all  descriptions. 

Out  of  all  this  extraordinary  crowding  of  the  yards  the 
net  result  is  that  we  have  under  construction  three  general  cargo 
steamers  intended  for  foreign  trade,  giving  a  total  of  23,000 
tons — considerably  less  than  one-half  the  tonnage  of  one  Ger- 
man vessel  tied  up  in  New  York  harbor,  the  Vaderland.  Does 
this  look  as  if  private  enterprise  were  taking  care  of  the  situa- 
tion? 

Compare  what  has  been  done  in  the  United  States  with  what 
was  accomplished  in  some  other  countries — in  Germany,  for  ex- 
ample. The  whole  sea-going  steam  merchant  marine  of  Ger- 


AMERICAN   MERCHANT   MARINE  79 

many  is  of  iron  and  steel,  and  comprises  a  relatively  large  num- 
ber of  the  largest,  fastest  and  most  powerful  steamships  in  the 
world.  The  two  largest,  wealthiest  and  most  powerful  single 
steamship  companies  in  the  world  are  the  Hamburg-American 
Company  and  the  North  German  Lloyd.  The  former  is  opposed 
to  any  subsidy.  The  latter  enjoys  a  subvention  of  insignificant 
amount  compared  to  tonnage  and  service,  and  compared  to  what 
we  pay  under  our  mail  contract  law.  Not  until  after  1880  did 
Germany  begin  to  build  her  steamers.  In  1870  it  became  impera- 
tive for  the  consolidated  German  Empire  to  build  and  equip  a 
navy  in  its  own  shipyards.  The  demonstration  there  made  gave 
the  ship  companies  confidence  and  they  began  building  at  home, 
withdrawing  most  of  their  former  patronage  from  the  British 
constructors  on  the  Clyde  and  Mersey.  The  merchant  marine 
of  Germany  is  under  the  general  supervision  of  the  Department 
of  the  Interior. 

There  are  7  German  shipping  companies,  which  together 
have  a  total  of  3,510,000  gross  registered  tons.  There  are  in 
all  43  German  shipping  companies  with  more  than  20,000  gross 
tons  each.  The  service  has  developed  a  specialty  in  the  establish- 
ment of  regular  lines,  and  until  the  war  there  was  line  traffic 
connecting  Germany  with  every  part  of  the  world  possessing 
any  commercial  significance. 

In  return  for  the  little  aid  that  was  extended  to  the  North 
German  Lloyd,  the  company  agreed  to  (i)  fix  upon  certain 
termini;  (2)  establish  certain  routes,  with  certain  stops;  (3) 
establish  branch  lines;  (4)  raise  maximum  speed  to  13^/2  knots 
per  hour  and  make  all  new  steamers  for  this  service  not  less 
than  6,000  tons;  (5)  pay  heavy  penalties  for  failure  to  carry  out 
the  contract.  By  this  contract  the  foreign  commerce,  national 
influence  and  progress  of  Germany  were  carried  to  East  Asia, 
Australia,  East  Africa  and  the  Mediteranean,  by  separate  lines. 

The  Hamburg-American  Line  alone,  at  the  beginning  of  1913, 
embraced  74  regular  steamship  lines.  It  owned  192  ships,  with 
a  gross  registered  tonnage  of  1,254,000.  In  1911  this  line  car- 
ried 403,000  passengers  and  7,990,000  tons  of  freight.  The  next 
largest  company,  the  North  German  Lloyd,  at  the  beginning  of 
1913,  possessed  133  ships,  with  an  aggregate  of  821,000  registered 
tons.  In  1911  the  line  moved  514,000  passengers  and  3,590,000 
tons  of  freight. 

On  June  30,   1915,  there  were  2,794  vessels  of  the  United 


8o  SELECTED  ARTICLES 

States  of  1,813,775  gross  tons  registered  for  foreign  trade. 
Of  this  number,  26  steamers  of  147,070  gross  tons  belonged  to 
the  Standard  Oil  Company  (New  Jersey)  ;  24  steamers  of 
113,243  gross  tons,  to  the  United  Fruit  Company;  and  10  steamers 
of  48,271  gross  tons,  to  the  Steel  Corporation;  total  for  the 
three,  60  steamers  of  308,584  gross  tons.  These  totals  sub- 
tracted from  the  general  total  above  leave  for  all  other  owners, 
2,734  vessels  of  1,562,950  gross  tons.  One  single  German  line  in 
1914  nearly  equalled  all  our  foreign  trade  tonnage. 

The  Standard  Oil  ships  are  tankers  built  particularly  to  carry 
oil  in  bulk,  and  their  export  trade  is  practically  confined  to  oil. 
On  the  return  voyage  these  steamers  sometimes  carry  small 
amounts  of  miscellaneous  imports.  The  United  Fruit  Com- 
pany's ships  are  specially  built  ships  with  refrigerating  apparatus, 
and  their  import  cargoes  into  the  United  States  consist  almost 
wholly  of  bananas  and  other  tropical  fruits.  They  export  from 
the  United  States  large  quantities  of  miscellaneous  general  cargo, 
and  the  company's  steamers  are  the  largest  transportation  factor 
in  the  export  trade  of  the  United  States  to  the  countries  of 
Central  and  South  America  and  the  West  India  Islands,  with 
which  the  steamers  trade.  Many  of  these  steamers  do  a  large 
general  passenger  business.  They  carried  700,000  tons  of  general 
export  cargo  from  the  United  States  last  year. 

As  to  the  cargoes  of  the  Steel  Corporation  ships,  my  under- 
standing is  that  in  addition  to  steel  products  and  raw  material 
for  steel  manufacture,  these  ships  also  engage  in  general  com- 
merce. I  understand  that  they  operate  only  a  freight  service  to 
the  west  coast  of  South  America  and  their  only  passenger  boat, 
the  Crofton  Hall,  to  Brazil  and  River  Platte  ports. 

The  cargo  boats  of  the  New  York  and  South  America  Steam- 
ship Company  and  the  Crofton  Hall  are  the  only  American  ves- 
sels in  the  South  American  trade,  excepting  the  United  Fruit 
Company's  ships  to  Colombia,  which  are  generally  classified  with 
the  Central  American  trade. 

This  is  our  situation,  while  for  the  year  1913-1914  our  im- 
ports by  water  amounted  to  $1,737,708,653  and  our  exports  to 
$2,047,759,859;  and  for  the  year  1914-1915  (ending  June  30,  both 
years)  our  imports  amount  to  $1,526,269,412  and  our  exports  to 
$2,466,356,063.  Ships  under  British  flag  are  our  main  reliance  for 
enabling  us  to  do  this  business.  Yet  such  ships  under  existing 
conditions  are  likely  at  any  time  to  be  requisitioned  for  govern- 


AMERICAN   MERCHANT   MARINE  81 

ment  purposes,  and  the  British  government  has  recently  materi- 
ally increased  its  income  taxes,  of  which  ship-owners  must  pay 
their  share,  and  this  will  be  reflected  in  further  increases  to  the 
present  staggering  freight  rates.  Again,  the  British  government 
will  not  permit  Americans  to  charter  British  ships.  Did  not  the 
British  government  recently,  through  its  Board  of  Trade,  take 
its  entire  tonnage  away  from  Argentina  and  send  the  ships  to 
Australia  for  cargoes  and  thus  paralyze  Argentina's  trade  in 
meat  with  depressing  consequences  in  other  trade? 

Our  position,  then,  is  one  of  abject  dependence  on  foreign 
ships  for  carrying  the  great  bulk  of  our  overseas  commerce.  It 
is  imperative  that  we  inquire,  How  are  we  to  build  up,  not  mere- 
ly a  merchant  marine,  but  an  American  merchant  marine? 
Not  by  having  American  citizens  investing  in  ships  sailing  under, 
foreign  flags  and  owing  allegiance  to  foreign  countries.  Not  by 
having  Americans  invest  in  ships  flying  our  flag  but  really  owned 
and  controlled  by  foreign  interests.  Nor  yet  by  having  ships  of 
American  registry  largely  or  wholly  owned  by  American  citizens 
but  in  combination  with  foreign  lines  which  will  have  the  power 
to  parcel  out  the  routes  and  the  business  and  fix  the  traffic  rates. 

An  American  merchant  marine  means,  if  there  be  any  sin- 
cerity in  the  name,  merchant  ships  having  American  registry, 
controlled  by  Americans,  operated  by  Americans,  for  Americans, 
independent  of  any  supervision  or  influence  by  any  other  coun- 
try or  people.  It  should  be  ample  in  tonnage  to  carry  the  export 
and  import  trade  of  the  United  States.  It  should  be  operated 
efficiently  and  be  forever  free  from  foreign  domination. 

I  do  not  know  how  this  can  now  be  secured  except  by  gov- 
ernmental control.  Even  if  individual  enterprise  could  be  de- 
veloped sufficiently  strong  and  effective  to  produce  an  adequate 
tonnage,  privately  controlled  ocean  transportation  may  serve  the 
purpose  today,  and  tomorrow  may  join  foreign  combinations  in 
utter  disregard  both  of  investors  and  the  public.  The  record  of 
the  past  shows  that  this  has  frequently  been  done.  That  would 
mean  that  the  United  States,  notwithstanding  the  nominal  tonnage 
under  its  flag,  was  still  dependent  upon  other  nations  for  its  ocean 
transportation.  We  ought  to  control  our  own. 

As  to  private  control,  there  are  two  great  obstacles  to  contend 
with :  First,  the  capital  required  to  make  even  a  small  beginning 
runs  into  millions.  Where  is  this  capital  to  be  had?  Only  great 
concerns  like  the  Standard  Oil  Company,  the  United  States  Steel 


82  SELECTED   ARTICLES 

Corporation  and  the  United  Fruit  Company  can  find  the  means. 
They  are  able  to  build  ships  to  carry  their  own  goods  to  foreign 
markets.  But  the  great  number  of  producers  in  this  country 
cannot  do  it,  each  for  himself,  nor  form  sufficient  cooperation 
to  do  it.  The  capital  required,  I  apprehend,  will  be  found  to 
be  controlled  by  those  interested  in  maintaining  the  situation 
as  it  is — with  practically  no  competition. 

Second,  the  independent  line,  when  established,  is  in  danger 
of  being  confronted  with  rebates  and  other  practises  which  may 
drive  it  on  the  rocks  of  despair.  Fighting  ships  of  the  combina- 
tions have  operated  heretofore  in  that  enterprising  way  and  are 
likely  to  be  brought  into  the  same  service  at  any  time. 

In  the  New  York  World  for  September  25  last  appeared 
statements,  including  one  by  F.  B.  Boulton,  President  of  the 
Federal  Forwarding  Company,  who  quite  circumstantially  charged 
that  "a  triple  combination"  consisting  of  the  British  Government, 
the  Netherlands  Overseas  Trust,  and  the  Holland-America  Line, 
is  operating  so  successfully  that  the  profits  of  the  Federal  For- 
warding Company  have  been  wiped  out  through  the  detention  of 
their  ships  with  valuable  cargoes,  even  though  the  ships  had  been 
loaded  and  the  manifests  passed  by  British  consular  agents  in 
the  United  States  before  the  departure  of  the  craft.  Some  in- 
dependent companies  charge  that  a  fourth  member,  Lloyds',  has 
been  added  to  the  combination.  Mr.  Boulton  said:  "My  com- 
pany is  openly  fighting  this  Holland-America  Line.  We  are  giv- 
ing lower  rates,  and  we  could  make  money  at  these  rates  if  it 
were  not  for  the  detention  of  our  cargoes." 

This  shows  how  little  chance  the  average  American  has  who 
tries  to  get  into  the  overseas  steamship  business  in  competition 
with  these  interests,  and  argues  most  forcibly  that  an  American 
merchant  marine  for  the  overseas  trades,  as  distinguished  from 
the  coastwise  trades,  can  only  be  successfully  inaugurated  by  the 
government 

Take  another  illustration.  It  appears  that  Brazil  allows  a 
reduction  of  duty  of  20  per  cent  on  American  cement.  That 
ought  to  insure  us  that  trade.  But  what  happened?  A  gentle- 
man who  has  experience  in  that  direction  tells  me : 

The  Europeans  by  an  aggressive  propaganda  in  the  press  have  edu- 
cated South  Americans  to  believe  that  North  American  cement  is  worth- 
less, and  as  a  result  England,  Belgium  and  Germany  have  controlled  the 
markets  of  those  countries  for  that  article.  Kraemer  &  Co.,  of  Rio,  re- 


AMERICAN   MERCHANT   MARINE  83 

ceived  samples  of  North  American  cement  and  decided  to  give  it  a  trial. 
They  ordered  several  thousand  barrels  which  were  distributed  on  arrival 
in  Brazil  and  gave  great  satisfaction.  As  a  result,  Kraemer  &  Co.  placed 
a  big  order  for  North  American  cement  in  the  United  States.  The 
European  cement  manufacturers  were  not  long  in  learning  of  this,  and 
they  immediately  proceeded  to  arouse  their  governments.  As  a  result, 
the  foreign  European  lines,  operating  from  New  York  to  Brazil,  imme- 
diately raised  the  freight  rates  on  cement,  absorbing  the  preferentials 
given  by  Brazil,  causing  the  cancellation  of  the  order  for  American 
cement,  thus  compelling  the  Brazilians  to  get  their  supply  from  England, 
Belgium  and  Germany. 

This  gentleman's  view  is: 

This  is  only  one  of  the  many  object-lessons  which  go  to  prove  that 
reciprocity  with  South  America,  or  any  other  country  for  that  matter, 
amounts  to  nothing  on  paper,  unless  it  is  backed  up  by  an  American 
ocean  transportation  system  owned  and  controlled  by  Americans  and 
under  the  supervision  of  the  government  of  the  United  States  just  as  our 
railroads  are. 

This  experience,  typical  of  what  may  be  expected  under  existing 
conditions,  and  the  conclusions  urged,  should  command  consid- 
eration. 

It  would  seem  quite  clear  that  we  can  no  longer  afford  to  be 
dependent  upon  others  for  practically  the  sole  means  of  trans- 
porting our  commerce.  It  is  not  unreasonable  to  say  that  their 
interests  must  control  them,  and  we  know  their  interests  are 
not  always  our  own.  In  times  of  national  emergency  certainly, 
and  in  ordinary  times  most  probably,  they  will  consider  their 
interests  first.  There  is  no  way  we  can  care  for  the  great  and 
increasing  foreign  commerce  of  this  country  except  by  having 
in  the  hands  of  Americans  the  moving  bridge  between  us  and 
other  countries.  When  foreign  commercial  competitors  control 
the  ocean  transportation,  what  can  the  people  of  the  United 
States  expect? 

Through  lack  of  merchant  vessels  to  carry  its  cotton  abroad 
the  South  suffered  a  loss  of  over  $200,000,000  last  year.  The 
farmers  of  the  Northwest  for  the  same  reason  suffered  losses  of 
millions.  Phosphate  could  not  be  moved  at  all.  Lumber  and 
coal  shipments  were  seriously  limited.  Our  merchants  and  manu- 
facturers likewise  sustained  heavy  losses  and  thousands  were 
out  of  employment  who  otherwise  would  have  been  regularly 
engaged  if  the  United  States  had  controlled  ample  fleets  of 
American  ships.  On  occasions  we  hear  quite  a  little  about  our 
independence  and  freedom.  On  land  the  United  States  is  a 


84  SELECTED   ARTICLES 

full-grown  man;  on  the  sea,   a  child  in  a,  row-boat  without  a 
life-belt. 

In  transmitting  the  proceedings  of  the  Pan-American  Con- 
ference to  the  President,  Secretary  McAdoo  says : 

There  was  unanimous  opinion  that  two  things  are  essential  to  the 
development  of  trade  and  improved  relations  between  the  Latin-American 
nations  and  the  United  States,  viz.: 

1.  The  granting  by  United  States  bankers  and  business  men  of  ample 
credits  to  Latin  America  and  the  prompt  provision  of  the  necessary  organi- 
zation and  facilities  for   this  purpose. 

2.  The   prompt  establishment  of  adequate  steamship   facilities  between 
the  leading  ports  of  the  United  States  and  South  America  which  the  con- 
ference,  by  resolution,   declared   "a   vital   and  imperative   necessity." 

No  one  wishes  to  stifle  or  hamper  private  enterprise;  but  it 
would  be  folly  to  close  our  eyes  to  the  facts,  and  it  would  be 
inexcusable  short-sightedness  not  to  profit  by  most  trying  expe- 
riences. Those  who  contend  shipping  should  be  left  to  private 
enterprise  admit  that  the  ocean  tonnage  of  the  United  States 
registered  for  foreign  trade  has  declined  from  more  than  two 
and  a  half  million  tons  in  1861  (2,642,628)  to  a  little  more  than 
a  million  tons  (1,076,152)  in  1914.  This  tonnage,  by  reason  of 
additions  under  the  Registry  Act  of  1914,  on  June  30,  1915, 
reached  1,813,775  gross  tons.  The  amount  of  tonnage  entering 
and  clearing  at  seaports  from  and  to  foreign  countries  has 
increased,  of  course,  many  times  since  1861.  It  is  nearly  three 
times  as  great  as  it  was  in  1887.  Whereas  American  ships  under 
our  flag  carried  65  per  cent  of  our  commerce  in  1861,  they 
carried  9.7  per  cent  in  1914.  The  vessels  of  one  foreign  country 
alone,  Great  Britain,  carried  53.7  per  cent. 

With  these  facts  conceded,  it  is  difficult  to  follow  the  logic 
of  the  argument  which  commits  us  to  the  course  heretofore 
pursued  as  the  best  or  the  acceptable  method  of  building  up 
our  merchant  marine.  The  irresistible  conclusion  must  be  that 
by  pursuing  that  course  our  flag  will  inevitably  vanish  from 
the  seas,  as  it  has  been  gradually  doing  during  the  past  fifty 
years. 

Our  tonnage  engaged  in  coastwise  and  inland  trade  has  stead- 
ily increased  for  many  years.  On  the  Great  Lakes  especially 
is  employed  a  fine  and  powerful  merchant  fleet — 610  vessels  of 
2,352,264  tons.  Its  development  has  been  most  gratifying  and  it 
is  pleasing  to  note,  that  without  any  subsidy  or  subvention  of 
any  kind,  there  we  have  an  example  of  the  cheapest  and  most 


AMERICAN   MERCHANT   MARINE  85 

efficient  means  and  method  of  taking  care  of  water-borne  com- 
merce in  the  world.  None  but  American  ships  can  engage  in 
this  coastwise  and  inland  trade,  and  these  are  exempt  from 
tonnage  dues.  This  has  always  been  our  policy  and  the  law. 
We  have  no  serious  problem  regarding  our  coastwise  and  inland 
service.  There  is  no  complaint  of  insufficient  ships  or  in- 
adequate service. 

In  speaking  of  merchant  marine  here,  we  have  reference  to 
merchant  ships  engaged  in  the  overseas  trade.  What  laws  affect 
these?  We  hear  it  averred  by  people  who  plainly  do  not  know 
what  our  navigation  laws  are  that  they  are  antiquated  and  con- 
stitute a  large  factor  in  causing  the  decay  of  our  merchant 
marine.  The  challenge  to  point  out  such  laws  has  been  met 
by  silence  or  meaningless  generalization.  It  is  true  that  selfish 
interests  did  begin  to  make  themselves  felt  in  the  making  of 
the  constitution,  and  subsequently  in  absurd  laws.  Later  those 
who,  in  a  mistaken  way,  thought  they  should  benefit  the  ship- 
yards, no  matter  at  what  cost  to  trade  and  commerce,  by  creating 
monopoly  and  giving  high  protection  for  their  benefit,  did  write 
into  statutes  provisions  which  had  the  effect  of  harming  the 
special  industry  they  were  aimed  to  benefit  and  seriously  injuring 
shipping. 

But  away  back  in  1880  began  a  crusade  to  do  away  with 
these  laws,  and  gradually  as  their  bad  effects  became  apparent, 
they  have  crumbled,  until  today  the  only  feature  of  our  naviga- 
tion laws  designed  solely  to  protect  shipbuilding  and  establish 
monopoly  which  remains  on  the  statute  books  is  Section  4347 
of  Revised  Statutes,  providing  that  foreign-built  vessels  cannot 
engage  in  the  coasting  trade  of  the  United  States.  Even  this 
does  not,  of  course,  affect  the  American  merchant  marine  in  the 
foreign  trade. 

Our  first  registry  act  (the  eleventh  law  passed  by  the  Ameri- 
can Congress)  was  passed  September  I,  1789,  and  restricted 
American  registry  to  ships  built  in  the  United  States  or  ships 
not  built  in  the  United  States  but  belonging  to  citizens  of  the 
United  States  on  May  16,  1789.  On  December  31,  1792,  Congress 
passed  a  registry  law,  more  elaborate  in  detail,  taking  the  place 
of  the  first  and  maintaining  the  same  essential  principles,  ex- 
cluding foreign-built  ships  from  American  registry.  That  was 
changed  in  1912  and  completely  repealed  in  1914,  so  that  ships 
may  be  built  or  purchased  anywhere  and  admitted  to  American 


86  SELECTED  ARTICLES 

registry  for  foreign  trade,  but,  as  heretofore,  ownership  of 
American  ships  is  restricted  to  "citizens  of  the  United  States,  or 
a  corporation  organized  under  the  laws  of  the  states  thereof." 
But  this  has  been  held  not  to  prevent  foreign  capital  to  an 
indefinite  extent  being  invested  in  a  corporation  owning  Ameri- 
can ships. 

Other  laws  provided  that  the  master  of  an  American  ship, 
and  all  the  officers  in  charge  of  a  watch,  including  the  pilots, 
must  be  American  citizens.  In  1914  Congress  authorized  the 
President  by  executive  order  to  suspend  this  requirement  for  a 
period  of  seven  years,  which  he  did. 

Since  1871  foreign  materials  for  shipbuilding  have  been  ad- 
mitted free  of  duty.  Since  1909  such  materials,  as  well  as  all 
articles  necessary  for  the  outfit  and  equipment  of  ships,  have 
been  duty-free,  with  this  proviso,  that  vessels  receiving  these 
rebates  of  duties  "shall  not  be  allowed  to  engage  in  the  coast- 
wise trade  of  the  United  States  more  than  six  months  in  any 
one  year,"  except  upon  payment  of  the  duties  remitted;  and 
that  vessels  built  for  foreign  account  and  ownership  shall  not 
engage  in  this  trade.  The  Panama  Canal  Act  of  1912  and  the 
Tariff  Act  of  1913  provide  for  free  materials  and  equipment 
for  ships  in  the  coastwise  trade  as  well  as  the  foreign  trade. 

The  Tariff  Act  of  1913  (Paragraph  J,  Subsection  6)  pro- 
vided for  a  reduction  of  duties  of  5  per  cent  on  all  goods  im- 
ported in  American  bottoms.  This  provision  is  in  question  in 
the  courts. 

The  only  other  law  I  can  recall  which  might  be  cited  as 
bearing  on  the  subject  is  what  is  known  as  the  Seamen's  Law, 
passed  in  1914,  going  into  effect  November  4,  1915,  as  to  vessels 
of  the  United  States,  and  March  5,  1916,  as  to  foreign  vessels, 
except  such  parts  as  conflict  with  treaties  or  conventions,  and 
those  take  effect  on  the  expiration  of  the  period  fixed  in  the 
notice  of  abrogation.  This  law  is  being  vigorously  assailed  by 
shipping  interests,  but  of  course  it  has  neither  helped  nor  hin- 
dered American  shipping  in  the  past.  It  contains  twenty  sections. 
Shipowners  insist  on  amendments  changing  one  section  and  strik- 
ing out  three.  Sixteen  sections  are  generally  approved.  But  we 
hear  very  little  of  anything  good  in  the  law.  I  will  refer  to  this 
law  later. 

For  some  years  past  steel  ships  have  been  purchased  more 
cheaply  abroad  than  at  home.  American  capital  purchased  ships 


AMERICAN   MERCHANT   MARINE  87 

abroad  and  operated  them  under  foreign  flags.  This  was  done 
by  forming  corporations  in  foreign  countries — Americans  hold- 
ing practically  all  the  stock — because  all  countries  have  required 
that  the  owner  shall  be  a  citizen  or  subject  of  the  country  whose 
flag  the  ship  flies.  The  corporation,  organized  under  the  laws 
of  a  country,  is  regarded  as  such  citizen  or  subject.  Foreign- 
built  ships  owned  by  Americans  in  fact,  but  of  record  by  foreign 
corporations,  have  about  equaled  in  tonnage  ships  registered 
under  the  American  flag  for  foreign  trade. 

The  Democratic  national  platform  in  1880  declared  for  "free 
ships  and  a  living  chance  for  American  commerce  on  the  seas 
and  on  the  land."  The  Panama  Canal  Act  of  1912  was  the 
first  firm,  direct  step  in  the  accomplishment  of  this  end.  Even 
under  that,  after  many  years  of  effort  in  that  direction,  only 
foreign-built  ships  less  than  five  years  old,  owned  by  Americans, 
were  enabled  to  raise  their  own  flag.  Section  5  of  the  Panama 
Canal  Act  of  August  24,  1912,  allowed  foreign-built  vessels, 
steam  or  sail,  certified  by  the  steamboat  inspection  service  as 
safe  to  carry  dry  and  perishable  cargo  and  not  more  than  five 
years  old,  to  be  registered  for  foreign  trade,  including  trade 
with  the  Philippines,  Guam  and  Tutuila. 

In  March,  1914,  before  there  was  even  a  rumor  of  a  European 
war,  Secretary  Redfield  asked  for  the  passage  of  the  Registry 
Act  of  August,  1914,  which  eliminated  that  limitation  as  to  age 
and  affirmed  in  full  the  traditional  Democratic  policy.  This 
measure,  enacted  and  put  into  operation  during  the  present 
national  administration,  has  been  a  distinct  and  undisputed  suc- 
cess. It  has  brought,  as  already  stated,  our  tonnage  registered 
for  foreign  trade  from  1,076,152  tons  on  June  30,  1914,  to 
1.813,775  gross  tons  in  1915.  Of  course  this  does  not  mean  that 
that  much  new  tonnage  has  been  built  or  acquired  during  that 
time  by  American  owners.  Most  of  this  increase  resulted  from 
the  transfer  of  American-owned  ships  from  foreign  to  American 
registry,  which  the  Registry  Act  allowed. 

The  act  of  June  28,  1864,  provided  that  "officers  of  vessels 
of  the  United  States  shall  be  in  all  cases  citizens  of  the  United 
States."  Many  vessels,  otherwise  eligible  to  registry  under  the 
acts  of  1912  and  1914  above  mentioned,  carried  officers  who 
were  not  citizens  of  the  United  States,  and  these  vessels  desired 
to  take  American  registry.  The  Dollar  Line,  with  English 
officers,  was  among  those  desiring  to  qualify.  Accordingly, 


88  SELECTED   ARTICLES 

pursuant  to  Section  2  of  the  Ship  Registry  Act  of  August  18, 
1914,  the  executive  order  of  September  4,  1914,  was  issued  per- 
mitting alien  officers  on  ships  admitted  to  registry  to  serve  until 
September  4,  1921. 

It  has  been  charged  that  our  plan  of  tonnage  measurement 
is  unfair  to  ships  under  our  flag.  This,  like  certain  other  criti- 
cisms of  the  laws,  is  without  justification.  There  is  no  need 
of  any  new  legislation  on  that  subject.  The  Commerce  Depart- 
ment has  made  regulations  practically  adopting  the  British  regu- 
lations as  to  measurement,  so  there  is  now  no  adverse  discrimi- 
nation in  tonnage  dues. 

Someone  may  ask,  "What  about  the  Seamen's  Law  which 
went  into  effect  on  the  4th  of  this  month?"  I  will  give  a  few 
facts  about  that  law.  It  has  been  so  roundly  abused,  in  large 
part,  if  not  wholly,  unjustly,  that  great  prejudice  has  been 
created  against  it.  The  mere  mention  of  it  has  got  to  be  as 
alarming  as  the  mark  of  the  beast  in  Revelation.  It  certainly 
has  some  admirable  provisions  and  apparently  few  objectionable 
ones.  Perhaps  these  can  be  improved  or  eliminated.  It  would 
have  been  fair  to  wait  until  the  Department  of  Commerce  had 
construed  it  and  adopted  regulations  under  it  before  indulging 
in  violent  denunciation.  While  we  are  getting  it  into  operation 
and  seeing  how  it  works,  it  may  help  the  patience  of  our  friends, 
the  ship-owners,  to  reflect  on  the  old  teaching  of  the  vikings 
that  "whoever  was  never  wounded  was  never  happy." 

It  has  been  claimed  for  years,  I  believe,  that  by  reason  of 
some  laws  or  regulations  respecting  seamen  on  our  ships,  the 
cost  of  operating  under  our  flag  is  greater  than  under  foreign 
flags.  These  laws  or  regulations  have  to  do  with  the  number, 
the  accommodations  and  the  food  of  the  crews  on  each  ship. 
It  is  also  claimed  that  American  crews  demand  higher  wages 
than  crews  on  foreign  ships.  It  is  now  claimed  that  the  Sea- 
men's Law  will  increase  this  difference  in  operating  expense 
to  our  disadvantage. 

In  the  first  place,  I  have  no  sympathy  with  those  who  ask 
that  sailors  on  American  ships  be  put  on  a  level  as  to  wages 
and  treatment  with  the  seamen  of  certain  other  countries.  In 
the  next  place,  if  we  are  to  ever  have  a  naval  reserve,  we  should 
have  trained  seamen  to  man  the  vessels.  We  must  make  it 
worth  while  for  our  young  men  to  go  to  sea.  In  time  of 


AMERICAN   MERCHANT   MARINE  89 

trouble  it  would  be  a  hazardous  situation  for  us  to  be  dependent 
on  foreigners  to  man  our  vessels  and  fight  for  our  flag.  Their 
native  land  might  be  involved  and  such  seamen  might  refuse 
or  do  worse.  Suppose  the  Seamen's  Law  does  subject  the  lines 
to  some  extra  expense;  they  could  scarcely  feel  it.  Refer  to 
the  statement  in  the  New  York  Journal  of  Commerce  of  October 
27  last,  under  the  heading  "Mercantile  Marine  Makes  Large  Gain 
in  Earnings."  Among  other  things,  it  says :  "At  the  current 
estimated  rates  of  earnings  the  International  Mercantile  Marine 
net  profits  are  between  $65,000,000  and  $70,000,000  per  year." 

The  wages  of  crews  for  American  ships  cannot  very  well 
be  reduced  by  any  legislative  act.  The  only  practical  alternative 
is  to  endeavor  by  legislation  to  make  a  free  market  in  American 
seaports  for  the  hiring  of  seamen.  Heretofore,  if  a  seaman 
arriving  in  an  American  port  on  a  foreign  ship  left  the  employ 
of  his  ship,  he  was  arrested  as  a  deserter  and  returned  to  his 
ship.  This  sort  of  servitude  exists  in  no  other  vocation.  The 
Seamen's  Act  does  away  with  this.  Hereafter,  seamen  arriving 
in  American  ports  may  leave  their  employment  without  fear  of 
arrest,  though  they  will  forfeit  half  their  wages.  This  great 
addition  to  the  supply  of  available  seamen  for  American  ships 
must  tend  to  reduce  the  seamen's  wages  on  American  ships,  if 
unduly  high.  At  the  same  time,  it  will  cause  owners  of  foreign 
vessels  to  increase  the  wages  of  their  seamen  to  keep  them  from 
leaving.  As  a  result,  seamen's  wages  on  American  vessels  and 
foreign  vessels  will  become  equalized.  I  find  that  the  strongest 
objection  to  the  Seamen's  Act  on  the  Atlantic  coast  comes  from 
foreign  shipping  interests.  As  to  the  action  of  the  Pacific  Mail 
abandoning  their  trans-Pacific  service,  it  would  take  too  much 
time  to  go  into  the  subject  fully,  but  I  may  assure  you  that 
there  is  nothing  in  the  Seamen's  Act  which  necessitated  their 
action.  Mr.  Justus  Wardell,  surveyor  of  the  port  of  San  Fran- 
cisco, has  just  made  a  report  in  which  he  shows  that  on  every 
trip  which  the  Pacific  Mail  steamers  "Mongolia"  and  "Man- 
churia" made,  the  Pacific  Mail  Company  cleared  $128,000  net. 
Each  of  these  steamers  made  about  eight  trips  a  year.  Sur- 
veyor Wardell  reports  that  a  Pacific  Mail  official  stated  to  him 
that  compliance  with  the  Seamen's  Act  would  have  necessitated 
changes  in  the  engine-room  only.  These  changes,  Surveyor  War- 
dell reports,  would  have  cost  the  Pacific  Mail  only  $1,000  a  month 


po  SELECTED  ARTICLES 

extra.  Figure  it  out  yourself.  Net  annual  profits  of  each  ship, 
$1,024,000.  Increased  cost  of  operation  on  account  of  the  Sea- 
men's Act,  $12,000.  The  fight  on  the  Seamen's  Law  assumes  the 
attitude  of  a  contest  between  the  decent  instincts  of  man  and 
his  gainful  appetites.  There  are  those  who  say  that  the  Pacific 
Mail  quit  because  they  had  to  make  good  on  their  original  an- 
nouncement in  view  of  the  furore  that  the  press  had  made  over 
it.  At  any  rate,  they  were  able  to  cash  in  a  good  big  profit  on 
the  transaction,  sufficient  to  more  than  double  the  market  price 
of  the  company's  stock.  It  is  said  that  one  of  these  ships  load- 
ing on  the  Pacific  Coast  will  earn  two-thirds  of  her  cost  on  the 
single  voyage  to  Europe.  Although  they  absolutely  abandoned 
their  patrons  who  furnished  all  the  business  they  could  take 
care  of  and  turned  the  bows  of  their  ships  from  the  Pacific  to 
the  Atlantic,  sold  and  transferred  them,  they  are  still  operated 
under  the  American  flag,  and  the  Seamen's  Law  applies  as  well 
in  one  ocean  as  the  other.  This  kind  of  thing  emphasizes  the 
view  that  we  are  confronted  with  an  absolute  necessity  that 
some  agency  shall  right  now  provide  steamship  service  under 
our  flag  between  the  United  States  and  foreign  countries. 

It  will  not  be  denied  that  we  have  today — and  they  may  pass 
soon  if  not  taken  advantage  of — marvelous  opportunities  for 
extending  our  trade  throughout  the  world.  When  gentlemen  say 
that  our  laws  and  regulations  deter  or  stand  in  the  way  of  re- 
creating a  merchant  marine ;  when  they  say  that  they  have  been 
forced  to  give  up  the  Pacific  entirely  and  that  they  cannot  com- 
pete on  the  ocean  with  foreign  lines,  all  they  say  but  furnishes 
unanswerable  argument  that  it  is  the  duty  of  the  government 
to  step  in  and  supply  the  ocean  transportation  facilities  which 
it  is  of  vital  interest  to  the  whole  country  should  be  had  and 
maintained.  We  get  the  trade  we  want  by  going  after  it.  We 
can  make  and  sell  in  the  foreign  markets  of  the  world,  when 
transportation  facilities  are  provided  at  reasonable  rates,  just  as 
good  articles  for  as  little  money  as  any  other  country.  No 
individual  country  need  dominate  the  seas.  Our  export  trade 
should  materially  increase  with  the  Orient  and  Latin  America, 
and  it  will  if  ships  flying  the  American  flag  are  put  in  opera- 
tion to  open  up  the  routes  and  maintain  a  permanent  and  proper 
service. 

Is  a  great,  powerful,  rich  country  like  the  United  States  to 


AMERICAN   MERCHANT  MARINE  91 

surrender  to  a  combination  of  shipping  interests,  throw  up  its 
hands,  and  confess  itself  absolutely  helpless  and  hopeless,  and 
unable  to  keep  its  flag  on  the  seas,  to  protect  its  commerce,  to 
take  the  surplus  products  of  its  fields,  mines  and  factories 
to  the  waiting  markets  of  the  world,  there  to  exchange  them 
for  the  things  we  need  in  those  markets,  settling  the  balance  in 
bills  on  our  financial  centers,  expressed  in  dollars  and  cents? 
For  fifty  years  we  have  hoped  that  individuals  would  engage  in 
that  most  profitable  business  with  American  ships.  Our  chief 
investors  in  shipping  have  solemnly  said  that  "free  ships"  would 
not  induce  them  to  give  their  ships  American  registry  under 
normal  conditions.  Although  the  legislation  for  free  ships  will 
help,  as  it  has  already  helped,  when  peace  is  restored  our  flag 
will  be  hauled  down  on  many  vessels,  we  are  told;  and  if  that 
be  true,  our  problem  will  remain  unsolved  if  we  rest  where 
we  are. 

We  have  noted  that  our  exports  increased  this  year  over  last. 
We  have  observed  that  our  shipyards  are  working  to  capacity. 
We  have  seen  American  tonnage  increase  since  the  Registry  Act 
of  1914  went  into  effect,  and  the  percentage  of  commerce  carried 
in  American  bottoms  increase.  But  we  must  face  the  facts,  on 
the  other  hand,  that  our  imports  have  decreased;  that  over 
$700,000,000  of  our  exports  are  solely  for  war  purposes.  Freights 
have  gone  mountain-high  and  in  some  instances  are  prohibitory — 
instance  phosphate,  coal,  lumber  and  other  products.  Some  of 
our  products  cannot  be  moved  at  all  over  sea  where  the  markets 
are.  Our  yards  are  busy  mainly  with  naval  work,  and  very  little 
new  construction  of  merchant  ships  for  foreign  trade  is  going 
on.  The  world's  ocean  tonnage  has  greatly  decreased.  Export 
of  "regular  merchandise"  for  the  year  ending  June  30,  1915,  is 
nearly  $200,000,000  less  than  in  1914.  To  North  America  the 
decrease  was  52  millions,  10  per  cent;  to  South  America,  25 
millions,  20  per  cent.;  to  Oceania,  6  millions,  7  per  cent.  The 
present  year,  it  is  claimed,  we  have  exported  only  32  per  cent 
as  many  agricultural  implements,  52  per  cent  as  many  sewing- 
machines,  33  per  cent  as  many  steel  rails,  as  we  did  in  the  year 
before  the  war.  The  figures  show,  too,  that  we  are  actually 
losing  our  exports  to  the  neutral  countries  faster  than  to  the 
belligerents. 

However,  the  trade  is  not  only  ready  for  us,  but  insistent. 


92  SELECTED   ARTICLES 

If  we  had  the  carriers  now  our  foreign  commerce  would 
enormously  increase.  This  is  shown  by  the  comparison  of  the 
exports  for  the  eight  months  ending  August  1915,  with  those  of 
the  eight  months  ending  August  1914,  which  ought  to  be  men- 
tioned in  connection  with  the  estimate  for  the  year  just  given. 
The  strong  tendency  is  for  our  exports  of  "regular  merchandise" 
to  assume  normal  proportions  even  now.  For  instance,  in  the 
exports  to  Europe  in  the  eight  months  last  mentioned  there  was 
an  increase  of  857  millions,  109  per  cent;  to  North  America  an 
increase  is  shown  of  nearly  3  millions;  to  South  America,  an 
increase  of  21  millions,  32  per  cent;  to  Asia,  a  gain  of  over  28 
millions,  46  per  cent;  to  Oceania,  an  increase  of  12  millions,  24 
per  cent;  to  Africa,  an  increase  of  5  millions,  31  per  cent.  The 
total  of  our  exports  grew  920  million  dollars  in  these  eight 
months,  or  70  per  cent. 

Do  not  doubt,  however,  that  our  exporters  are  paying  foreign 
ship-owners  dearly  for  this  business.  The  rate  on  grain  to  Liver- 
pool is  40  cents  a  bushel,  while  before  the  war  it  was  4  cents. 
The  rate  on  flour  has  gone  from  12  cents  to  65  cents  a  hundred 
pounds.  On  provisions  the  rate  is  increased  from  $5  a  ton  to  $i 
a  hundred  pounds.  On  cotton  the  rate  is  $1.25  where  formerly 
it  was  20  cents  a  hundred  pounds.  Eastern  railroad  terminals 
are  congested,  due  to  lack  of  ships.  Freight  continues  to  pile 
up  at  the  ports.  No  law  controls  ocean  rates.  We  may  expect 
to  pay  foreign  shipowners  their  own  price,  and  that  price  will  be 
higher  yet. 

Once  upon  a  time  Illinois  owed  millions  to  Europe ;  she  could 
not  pay  because  her  chief  means  of  raising  money,  the  grain 
crop,  could  not  avail  for  the  reason  that  there  was  lack  of  cheap 
transportation;  and  again,  foreign  corn  laws  excluded  her  wheat 
from  a  market  in  the  land  of  the  creditors.  Repudiation  was 
threatened,  but  with  rugged  honesty,  by  persistent  industry,  after 
a  time  the  debts  were  fully  paid. 

Our  markets  can  be  restricted  or  eliminated  without  resort  to 
import  laws — control  of  the  means  of  transportation  is  sufficient. 
The  welfare  of  our  producers  is  in  peril,  the  necessary  equipment 
of  the  nation  itself  is  incomplete  when  we  are  dependent  on 
foreign  vessels  to  reach  markets.  The  government  can  bring 
about  public  control  of  terminals.  It  can  do  away  with  the  dif- 
ferentials complained  of.  It  can  regulate  rates  on  the  ocean  to 
a  great  extent.  It  can  arrange  for  through  bills  of  lading  and 


AMERICAN   MERCHANT   MARINE  93 

reasonable  traffic  agreements  with  connecting  land  carriers.  All 
of  these  matters  which  have  been  mentioned  as  needing  correc- 
tion can  be  remedied — matters  which  individuals  cannot  reach 
and  which  materially  affect  the  water  carriers. 

The  same  provision  that  the  government  would  work  out 
through  the  shipping  board  for  the  ships  under  its  control  it 
would  assist  in  arranging  for  all  other  lines.  I  cannot  escape 
the  strong  conviction  that  our  problem  can  be  solved  only  along 
the  lines  of  the  amendment  to  S.  6856  offered  January  26th  last. 
I  do  not  mean  to  take  an  arbitrary  position.  If  anything  better 
is  proposed  or  any  modification  is  suggested  that  reasonably 
promises  to  improve  existing  conditions  more  certainly  and 
speedily,  to  serve  the  ends  of  jutice  for  all  concerned,  to  take 
care  of  the  public  interests  and  achieve  the  common  good,  I 
should  lend  it  what  support  I  could. 

We  have  seen  what  the  situation  is.  Although  the  minority 
report  on  the  Ship  Purchase  Bill  (S.  6856)  argued  that  there 
was  no  occasion  to  be  disturbed,  that  really  a  let-alone  policy 
was  probably  the  wisest  after  all,  in  effect  that  there  was  no 
call  for  Congress  to  do  anything,  I  think  it  may  be  agreed  that 
there  is  widespread  demand  for  resuscitating  our  merchant 
marine.  The  truth  is,  delaying  action  thus  far  by  filibustering 
to  death  the  bill  before  the  last  Congress  has  resulted  in  a  loss 
of  hundreds  of  millions  of  dollars  to  the  people  of  the  United 
States  in  extortionate  freight  charges  and  loss  of  commerce. 

The  records  show  that  enormous  profits  were  made  in  foreign 
shipping  before  the  war.  No  doubt  foreign  shipping  people  will 
continue  to  charge  American  merchants  the  last  cent  the  traffic 
will  bear.  Even  before  the  European  war  there  was  no  certainty 
or  stability  about  rates  on  bulk  freights.  Since  then  contracts 
have  been  violated,  agreements  disregarded,  quotations  ignored 
and  charges  fixed  (irrespective  of  previous  agreements)  at  what- 
ever the  shipowners  chose  to  name. 

The  cry  of  socialism  and  paternalism  has  been  raised.  A 
mere  name,  however  violently  shouted,  does  not  frighten  me. 
That  cry  has  been  raised  before.  Paternalism  and  socialism 
were  shrieked  when  other  legislation  which  put  the  government 
into  private  business  and  which  the  people  would  not  countenance 
repealing  now,  was  proposed  and  enacted.  I  might  mention  as 
attacked  on  similar  grounds  the  postal  savings  law,  the  parcels- 
post  law,  the  rural  free-delivery  law ;  even  the  five  acts  in  refer- 


94  SELECTED   ARTICLES 

ence  to  agricultural  education,  establishing  agricultural  colleges 
and  providing  for  agricultural  extension  work;  respecting  the 
Panama  railroad  and  steamship  line  which  was  taken  over  by 
the  government;  providing  for  the  construction  by  the  govern- 
ment of  a  railroad  in  Alaska;  even  the  measure  for  building  of 
dams  for  power  and  irrigation  purposes,  the  government  manu- 
facturing its  own  cement.  The  bill  to  establish  the  federal  re- 
serve system  was  criticized  on  similar  grounds;  also  the  law 
creating  a  bureau  of  marine  insurance  in  the  Treasury  Depart- 
ment of  the  government,  without  which  most  of  our  export  trade 
since  the  war  would  have  been  impossible.  Similar  protests  and 
dire  predictions  were  heard  when  the  interstate  commerce  com- 
mission was  established  under  the  administration  of  President 
Cleveland  in  1887.  Railroad  authorities  themselves  pay  high 
tribute  to  that  great  commission,  and  I  think  it  is  quite  univer- 
sally conceded  that  it  is  an  absolutely  necessary  portion  of  our 
governmental  institutions.  Legislation  definitely  creating  a 
permanent  merchant  marine  will  enable  the  American  people 
to  assert  and  protect  their  rights  and  interests  in  the  vital  matter 
of  ocean  transportation  and  overseas  trades — and  I  know  of  no 
other  way  of  reaching  that  point  or  accomplishing  that  result. 

There  is  no  use  to  discuss  subsidy.  It  so  happens  that  the 
United  States  now  grants  to  four  ships  a  larger  subsidy,  about 
$750,000  a  year,  than  is  granted  by  any  other  country  in  the  world 
for  similar  service.  The  favorable  mail  contracts  now  provided 
for  by  law  are  the  only  subvention  the  government  will  give.  It 
is  remarkable  how  futile  these  have  been  in  the  building  up  of 
our  merchant  marine. 

Contrary  to  general  impression,  the  merchant  marine  of  the 
maritime  nations  of  the  world  receives  no  subsidy.  Mail  sub- 
vention for  fast  mail  and  passenger  service,  yes;  but  a  subsidy 
such  as  some  of  the  opponents  to  the  government  merchant 
marine  ask  for,  no;  the  great  bulk  of  the  world's  ocean  com- 
merce is  carried  in  the  lowly  "tramps"  or  non-passenger  cargo 
boats,  which  never  received  one  cent  of  subsidy  from  any 
country.  It  can  be  shown  that  the  normal  profits  of  ocean 
steamers  are  so  large  that  it  is  absurd  to  talk  of  subsidies  as  a 
remedy  for  our  shipping  plight.  Since  the  facts  are  becoming 
better  known,  those  who  advocate  subsidy  are  becoming  fewer 
in  number. 


AMERICAN   MERCHANT   MARINE  95 

I  believe  I  have  made  clear  that  none  of  the  remedies  ad- 
vanced by  opponents  to  a  government  merchant  marine  will  do. 
Our  present  navigation  laws  are  not  at  fault;  subsidy  is  out  of 
the  question;  and  private  capital  will  not  or  cannot  provide  an 
adequate  American  mercantile  marine  for  the  overseas  trade. 

The  only  objections  I  have  heard  advanced  against  a  gov- 
ernment merchant  marine  are  three:  First,  it  is  socialistic.  I 
believe  I  have  answered  that. 

Second,  it  will  check  private  enterprise  from  going  into  the 
overseas  shipping  business.  What  has  private  enterprise  done 
in  all  the  years  past  towards  building  up  an  American  merchant 
marine?  Practically  nothing.  Three  ocean  carriers  under  con- 
struction in  a  year  and  a  half  just  past,  when  our  trade  was 
distressed  for  ships,  is  what  individual  or  private  enterprise  has 
given  us.  From  the  standpoint  of  supplying  the  demands  of 
commerce  and  trade,  from  the  standpoint  of  the  needs  of  the 
army  and  navy,  from  the  standpoint  of  taking  our  rightful  place 
on  the  seas,  from  the  standpoint  of  urgent  national  necessity, 
the  call  is  for  mail  and  cargo  ships,  convertible  as  may  be  re- 
quired into  auxiliaries  and  transports.  There  is  no  way  open  to 
us  but  for  the  government  to  lead  off  right  now  in  responding  to 
that  call.  The  government  will  never  encroach  on  any  routes 
that  are  being  taken  care  of  by  private  steamship  lines,  under  the 
American  flag. 

Third,  it  is  said  that  the  government  merchant  marine  will 
be  a  financial  failure.  I  am  afraid  that  is  just  what  many  who 
oppose  the  measure  fear  it  will  not  be.  I  am  assured  by  practical 
steamship  people  that  it  will  be  almost  impossible  for  the  gov- 
ernment merchant  marine  to  lose  money ;  that  the  profits  in  ocean 
shipping  are  so  large  in  normal  times,  and  particularly  so  at 
present,  that  it  is  inconceivable  that  any  shipping  enterprise  car- 
ried out  on  the  scale  this  would  be  can  lose  money.  On  the  con- 
trary, I  am  assured  that  satisfactory  profits  can  be  earned  after 
making  very  material  reductions  in  freight  and  passenger  rates. 
The  reports  of  earnings  of  numerous  steamship  lines  which  I 
have  seen  fully  bear  this  out. 

The  Washington  Post  of  November  i  published  a  "special" 
from  New  York,  which  carried  this  statement : 

The  mercantile  marine  of  Great  Britain  has  reaped  such  a  golden 
harvest  to  its  financiers  as  makes  Arabian  Nights'  dream  of  wealth. 


96  SELECTED   ARTICLES 

They  have  been  allowed  by  the  government  to  increase  freights  from 
500  to  600  per  cent,  the  complete  removal  of  German  competition  from 
the  high  seas  and  the  arbitrary  regulation  of  American  competition  having 
given  the  Britishers  an  absolute  monopoly.  Old  vessels  which  eighteen 
months  ago  could  hardly  have  been  sold  at  breaking-up  prices  of  $50  or 
$60,  have  found  ready  purchasers  at  from  $125,000  to  $300,000,  and 
in  many  cases  have  paid  for  themselves  in  a  single  voyage. 

A  large  London  importer  of  corn  from  South  America,  while  gloating 
over  his  profits  on  freight  rates,  which  have  risen  from  10  shillings  per 
ton  in  the  first  half  of  1914  to  75  shillings  per  ton  at  the  present,  con- 
sidered it  a  matter  of  the  highest  importance  that  the  government  should 
take  steps  to  prohibit  any  and  all  competition  from  neutral  countries, 
especially  from  the  United  States. 

The  Cunard  Company  has  paid  a  dividend  of  20  per  centv  despite  the 
loss  of  the  Lusitania,  with  consequent  suits  for  damages  by  the  families 
of  the  victims,  which  amounted  to  an  enormous  sum,  and  despite  sub- 
marine perils,  which  at  different  periods  practically  cut  off  the  passenger 
traffic  on  English  ships  from  American  ports.  Frederick  Leyland  &  Com- 
pany are  paying  only  their  usual  dividend  of  10  per  cent,  but  they  have 
this  year  erased  from  their  budget  all  arrears  accumulated  during  the 
past  three  years.  The  Empire  Transport  Company  acknowledges  that  its 
net  profits  for  this  year  are  an  increase  of  100  per  cent  over  the  net 
profits  for  the  period  from  June,  1913,  to  June,  1914. 

The  London-American  Maritime  Company,  organized  in  June  of  last 
year  under  the  special  protection  of  the  British  government,  has  earned 
in  its  first  year  dividends  of  27  per  cent  on  its  ordinary  shares,  while  the 
holders  of  preference  shares  get  an  additional  11%  per  cent,  or  38%  per 
cent. 

The  Journal  of  Commerce  of  October  28  last  says: 

American  exporters  as  far  as  trans-atlantic  trade  is  concerned,  are 
facing  a  condition  of  acute  congestion  in  shipping  facilities  and  of  unprece- 
dently  high  ocean  transportation  charges.  Ship  owners  are  reaping  a  veri- 
table bonanza. 

Under  date  of  October  27  last  the  Journal  gives  the  statement 
of  a  railroad  official  that  the  railroads  coming  into  New  York 
are  handling  the  largest  amount  of  traffic  in  their  history,  and 
the  congestion  at  terminals  is  likely  to  be  the  greatest  ever  seen, 
due  to  the  inability  of  ship  lines  to  move  the  freight  sent  to  this 
city,  "which  is  already  sufficient  to  fill  five  times  over  every  vessel 
available  for  export  purposes." 

With  freight  embargoes  at  Galveston  and  threatened  at  New 
York,  can  there  be  any  doubt  that  the  absence  of  ships  is  hold- 
ing back  the  movement  of  our  commerce?  There  is  serious  need 
of  American  ships  in  the  Australian  trade.  This  commercial 
situation  is  pressing  and  I  have  by  no  means  exhausted  it. 


AMERICAN   MERCHANT   MARINE  97 


ARGUMENTS  FOR  GOVERNMENT  AID1 

The  main  arguments  presented  to  the  Commission  in  support 
of*  legislation  for  the  revival  of  the  merchant  marine  may  be 
grouped  under  three  heads.  To  begin  with,  it  is  asserted  that 
the  transportation  of  American  imports  and  exports  in  American 
bottoms  would  mean  an  annual  saving  of  about  $200,000,000  now 
paid  to  the  owners  and  operators  of  ships  flying  foreign  flags.. 
Most  of  this  amount  goes  abroad,  and  thus  constitutes  a  large 
drain  on  the  resources  of  the  country,  whereas  it  might  as  well 
be  kept  at  home  and  turned  into  the  pockets  of  American  ship- 
builders, ship-owners  and  seamen.  In  the  next  place,  it  is  con- 
tended that  the  rehabilitation  of  the  merchant  marine  would  be 
the  means  of  extending  American  trade,  through  the  opening  of 
new  channels  of  commerce  and  the  discovery  of  new  markets.  A 
large  merchant  marine  will  mean  greater  competition  and,  hence, 
lower  transportation  rates.  It  will  mean  the  establishment  of 
new  lines  of  steamers  between  the  United  States  and  parts  of 
the  world  where  the  American  flag  is  now  rarely  seen.  To  take 
a  single  illustration,  our  exports  to  South  America  are  only  about 
one-third  of  our  imports,  a  condition  mainly  attributable  to  the 
lack  of  first-class  steamship  lines  between  the  United  States  and 
those  countries.  There  is  not  a  single  first-class  line  of  Ameri- 
can steamers  between  the  United  States  and  Buenos  Ayres,  al- 
though there  are  half  a  dozen  lines  between  that  port  and  Euro- 
pean ports.  The  result  is  that  the  bulk  of  the  imports  of  lower 
South  America  come  from  Europe  and  not  from  the  United 
States.  Lastly,  and  this  is  the  most  important  argument  of  the 
subsidy  advocate,  the  national  defence  requires  the  rehabilitation 
of  the  merchant  marine.  However  powerful  the  navy  may  be 
in  point  of  battleships,  it  is  useless  without  colliers,  transports, 
scouts,  despatch  vessels,  etc.  Is  it  not  poor  economy,  the  subsidy 
advocates  ask,  for  the  government  to  build  these  auxiliary  ves- 
sels and  maintain  them  in  idleness  when,  by  suitable  encourage- 
ment, private  capital  may  be  induced  to  build  them  under  con- 
ditions, which  will  make  them  easily  convertible  into  war-vessels 
at  slight  expense,  and  available  for  the  use  of  the  government 
upon  the  outbreak  of  war?  If  they  are  neither  constructed  by 

1  From  "Merchant  Marine  Investigation,"  by  James  W.  Garner. 
North  American  Review.  180:360-74.  March,  1905. 


98  SELECTED   ARTICLES 

the  government  for  the  use  of  the  navy,  nor  liable  to  impress- 
ment from  the  merchane  marine,  the  government  will  be  com- 
pelled to  depend  upon  purchases  in  the  foreign  market.  The  im- 
policy of  this  was  shown  at  the  outbreak  of  the  war  with  Spain 
in  1898.  The  government  was  conpelled  to  hunt  the  seas  for 
transports  and  colliers,  and  after  considerable  anxiety  and  delay, 
it  succeeded  in  purchasing  or  chartering  some  forty  ships  from 
foreign  nations.  The  American  vessels  liable  to  impressment 
under  the  mail  subsidy  act  were  taken  over  by  the  navy  without 
delay,  but  the  number  was  inconsiderable.  One  line,  which  is 
a  beneficiary  of  the  mail  subsidy  to  the  extent  of  $200,000  per 
year,  furnished  the  government  with  nine  vessels  and  500  seamen. 
Besides  furnishing  the  navy  with  auxiliary  vessels,  the  mer- 
chant marine  serves  as  a  nursery  of  seamen.  Whether  built  at 
home  or  purchased  abroad  upon  emergency,  war  vessels  must 
be  manned  by  experienced  and  trained  seamen.  Unlike  volun- 
teers for  the  army,  they  cannot  be  drawn  from  the  farm,  the 
shop  or  the  mine  by  proclamation.  The  weakness  of  the  United 
States  in  this  respect  is  well  known.  More  than  half  of  the  sea- 
men who  sail  under  the  American  flag  are  foreigners,  and  only 
about  60  per  cent  of  those  who  owe  allegiance  to  the  flag  are 
native-born. 


THE  IMPERATIVE  NEED  FOR  SHIPS  OWNED 
BY  AMERICANS1 

Our  merchant  marine  was  never  as  large  as  to-day.  The 
increase  in  it  was  never  as  large  as  in  the  last  fiscal  year.  It 
is  growing  to-day  faster  than  it  ever  grew  before.  We  never 
needed  ships  as  badly  as  we  need  them  now.  We  never  were 
more  dependent  upon  foreign  ships  than  we  are  now.  Never 
did  this  dependence  rest  on  a  more  shaky  foundation.  Never 
had  we  so  much  of  a  marine.  Never  did  we  suffer  so  much  from 
lack  of  one.  Never  did  we  add  to  it  so  fast.  Never  was  our 
helplessness  to  add  to  it  sufficiently  more  marked. 

A  shipment  of  flour  to  Egypt  is  stopped  at  the  dock  because 

1  By  William  C.  Rcdfield,  U.  S.  Secretary  of  Commerce.  Engineering 
Magazine.  50:661-5.  February,  1916. 


AMERICAN   MERCHANT   MARINE  99 

others  need  the  ships  that  had  contracted  to  carry  it,  and  our 
shipper  is  helpless  because  of  the  war  clause  in  his  contract. 
When  in  normal  dependence  upon  a  contract  another  shipper  for- 
wards goods  to  your  port  for  foreign  transit,  the  vessel  that  was 
to  take  them  is  commandeered  by  its  government,  and  our  ship- 
per protests  in  vain.  In  Brooklyn  a  large  shipment  is  refused 
transit  because  the  shipper  has  not  signed  a  certain  agreement 
having  nothing  to  do  with  the  goods  which  are  refused.  Even  a 
shipment  from  New  York  to  Manila  (between  two  ports  of  the 
United  States,  it  will  be  noted)  f  is  refused  transportation  unless 
the  shipper  will  sign  an  agreement  as  to  the  nationality  of  the 
consignee. 

You  will  observe  that  it  is  not  a  question  of  rates,  or  even  in 
all  cases  of  vessels,  but  rather  than  since  we  must  depend  on 
ships  of  alien  ownership  to  carry  our  goods,  it  is  clear  that  when 
the  interest  or  the  duty  of  those  alien  owners  requires  them  to 
put  their  own  necessities  first,  we  helplessly  stand  aside.  Just  so 
far  as  these  things  go  we  are  not  an  independent  people.  We  do 
our  trade  by  the  consent  of  others  when  it  pleases  them  to  have 
us  do  it,  as  it  pleases  them  to  have  us  do  it,  and  to  the  extent 
that  it  pleases  them  to  have  us  do  it,  and  under  rules  that  they 
lay  down.  That  is  the  condition  in  which  we  now  stand.  Until 
we  shall  get  enough  American  ships  we  must  accede  to  the  neces- 
sities which  may  and  now  do  impel  alien  owners  of  vessels  to 
action  hurtful  to  us. 

In  our  export  trade  are  two  great  divisions — the  temporary 
and  the  permanent.  It  is  our  interest  to  promote  the  latter.  It 
is  to  some  extent  the  interest  of  our  customers  to  promote  the 
former.  The  farmer,  the  merchant,  the  mechanic,  the  miner  are 
alike  interested  to  have  American  commerce  flow  freely  to  all 
parts  of  the  world  where  it  wills  to  go,  under  the  control  of 
those  in  sympathy  with  it  and  whose  duty  it  is  to  promote  it. 
We  have  been  a  department  store  without  a  delivery  system,  de- 
pending on  our  rivals  for  the  use  of  their  wagons.  Now  there 
are  fewer  wagons  than  there  were  and  our  need  for  delivery  is 
greater  than  it  was.  Our  rivals,  indeed,  want  us  to  use  so  many 
of  their  wagons  as  will  take  to  them  the  goods  they  need.  They 
do  not  care  to  have  us  use  other  of  their  wagons  because  they 
need  them  themselves  in  their  business,  and  their  business  just 
at  present  is  not  our  business  and  is  more  important  to  them 


ioo  SELECTED  ARTICLES 

than  our  business  is.  So  we  are  out  of  it  in  large  part  till  we 
get  wagons  of  our  own.  So  much  briefly  for  the  need. 

Our  facilities  are  strained  to  meet  it.  On  July  I  last  we 
were  building  76  steel  merchant  vessels  in  our  shipyards.  Be- 
tween July  i  and  December  i  126  had  been  ordered,  making  202 
in  all,  of  a  total  of  761,511  gross  tons.  The  construction  of 
American  merchant  vessels  now  in  progress  or  under  contract 
is  not  only  greater  in  tonnage  than  at  any  former  time  in  the 
history  of  the  United  States,  but  this  new  tonnage  is  more  effi- 
cient than  the  merchant  ships  constructed  at  any  previous  time 
in  our  history.  Indeed  there  is  competent  authority  for  saying 
that  the  American  freight  steamer  by  reason  of  her  design  and 
equipment  is  a  more  efficient  tool  for  transportation  than  her 
foreign  competitor. 

Despite  the  great  past  and  present  increase  in  our  ocean  ship- 
ping, we  are  yet  sadly  handicapped  in  our  foreign  trade,  and 
much  as  we  are  doing  we  are  still  unable  to  seize  to  the  full  the 
opportunity  at  present  offered  us.  Every  craft  that  can  by 
courtesy  be  called  a  ship  is  in  service.  The  familiar  coasting 
schooner  is  in  the  Mediterranean  coal  trade,  and  if  there  were 
more  of  them  they  could  be  so  employed.  The  English  mer- 
chant marine  has  either  lost  or  is  using  for  war  purposes  one- 
quarter  its  full  strength,  perhaps  more.  In  a  degree,  the  same 
is  true  of  the  other  belligerent  powers,  and,  of  course,  certain 
fleets  are  absent  from  the  seas. 

We  have  made  some  use  and  are  making  better  use  all  the 
time  of  our  opportunities  during  the  war,  and  should  Great 
Britain  or  Germany  require  their  ships  for  their  own  restored 
trade  when  the  war  ends,  we  shall  need  American  ships  to  do  the 
larger  business  we  are  finding  with  neutral  countries,  unless  we 
are  content  again  to  lie  down  and  do  this  business  as  of  old  at 
the  will  of  others  and  for  such  a  time  and  in  such  a  way  as  they 
wish  us  to  do  it.  I  take  it,  however,  that  the  United  States  has 
gotten  a  larger  vision  than  it  had  two  years  ago,  and  that  by  the 
extension  of  banks  and  other  mechanisms  of  trade,  it  is  reaching 
out  more  than  it  ever  did  into  the  greater  world.  I  think  this 
process  will  not  be  denied  and  can  not  be  stopped  and  that  we 
shall  insist  upon  doing  it  where  we  please  and  as  we  please  and 
for  our  own  benefit  though  with  due  regard  to  the  rights  of 
others,  and  this  means  that  we  shall  think  it  necessary  to  do  it 


AMERICAN   MERCHANT   MARINE        r>  Moi 

in  ships  which,  if  there  were  difficulty  anywhere,  will  be  con- 
cerned to  do  things  our  way. 

I  have  not  touched  yet  upon  another  serious  factor  in  this 
matter.  Great  Britain  is  using  something  like  3,000  ships  as  at- 
tendants upon  her  great  war  fleet.  These  are  of  many  kinds  but 
they  are  all  merchant  vessels,  yet  without  them  the  war  fleet 
would  be  helpless.  When  we  sent  one  fleet  of  battleships  around 
the  world  some  years  ago,  we  had  to  hire  foreign  vessels  to 
keep  them  in  coal  and  supplies.  We  do  not  make  the  navy  to 
keep  it  in  ports,  but  we  have  not  the  means,  to  be  candid,  to  keep 
it  long  at  sea.  It  would  require  about  900  ships  of  all  kinds  from 
the  merchant  service  to  keep  it  well  supplied  at  sea,  and  we  have 
not  those  ships.  We  have  about  500  and  that  is  not  enough,  and 
so  our  navy  would  have  to  leave  its  job  and  come  home  to  get 
coal  and  supplies  at  the  time  when  it  was  most  needed  at  sea. 
That  is,  it  would  do  this  unless  we  get  more  ships.  •  We  need 
400  more  at  least,  and  we  ought  to  have  them  as  soon  as  possible, 
and  there  ought  to  be  no  doubt  about  it.  Observe  that  if  we 
took  all  the  vessels  estimated  to  be  available  for  this  purpose, 
we  should  still  be  short  400. 

We  need,  then,  ships  not  alone  for  the  present  emergency, 
much  as  they  are  needed  there,  but  for  the  maintenance  of  our 
commercial  independence  on  the  sea  and  for  the  support  of  our 
navy  should  it  be  required  for  our  defense.  How  shall  we  get 
them?  It  is  not  a  job  to  be  delayed,  for  time  is  of  its  very 
essence,  yet  every  private  yard  is  full  for  about  two  years  to 
come.  They  may  be,  I  trust  they  will  be,  extended  or  multiplied, 
but  it  will  be  necessary  to  have  some  assurance  of  business  suffi- 
cient to  warrant  the  investment  in  so  doing.  We  have  a  few 
government  vessels  capable  of  carrying  coal  or  cargoes,  which 
we  cannot  use  for  lack  of  lawful  authority,  else  they  might  be 
doing  useful  work  today  for  private  commerce  and,  in  some 
measure  perhaps,  tend  to  hold  down  the  rates  exacted  of  our 
citizens  elsewhere. 


.02  SELECTED  ARTICLES 

WHAT  CONGRESS  SHOULD  DO  TO  DEVELOP 
AN  AMERICAN  MERCANTILE  MARINE1 

The  American  merchant  marine  has  apparently  been  the  object 
of  much  solicitude  by  the  great  political  parties  of  the  United 
States.  The  Republican  party  in  its  national  platforms  from  1884 
to  1912,  every  four  years,  has  strenuously  declared  in  favor  of 
a  revived  merchant  marine,  the  declaration  in  1912  being:  "We 
believe  that  one  of  the  country's  most  urgent  needs  is  a  revived 
merchant  marine.  There  should  be  American  ships  and  plenty 
of  them  to  make  use  of  the  great  American  oceanic  canal  now 
nearing  completion."  The  Progressive  party  favors  this  policy. 
The  Democratic  party  since  1880  through  its  national  platform 
has  declared  its  belief  in  fostering  the  growth  of  a  merchant 
marine  "which  shall  develop  and  strengthen  the  commercial  ties 
which  bind  us  to  our  sister  republics  of  the  South,  but  without 
imposing  additional  burdens  upon  the  people  and  without  boun- 
ties and  subsidies  from  the  public  treasury." 

Various  plans  have  been  proposed : 

First,  subsidies.  The  Republican  party  never  has  been  able 
to  put  upon  the  statute-book  effective  subsidies  because  of  its 
divided  opinion  and  because  of  the  opposition  of  the  Demo- 
cratic party,  which  has  believed  that  subsidies  would  lead  to 
public  corruption  and  unjust  and  indefensible  discrimination  in 
favor  of  private  interests  against  the  public  interest. 

Second,  discriminating  duties.  Congress  in  1913  made  a  pro- 
vision for  discriminating  duties,  but  the  Attorney  General  found 
that  it  violated  our  treaty  obligations  with  other  nations. 

Third,  guaranties  by  the  government  of  the  bonds  of  private 
corporations.  This  would  be  a  subsidy  and  impracticable. 

Fourth,  the  amendment  of  our  navigation  laws.  The  ship- 
ping interests  of  the  country  have  apparently  never  been  suffi- 
ciently interested  to  present  their  views  in  an  adequate  and 
proper  manner  to  the  committees  of  Congress,  showing  the 
amendments  of  the  navigation  laws  which  were  essential  to  the 
upbuilding  of  the  merchant  marine.  Certainly  those  who  are 
interested  in  the  ocean-carrying  service  should,  if  these  laws  are 

1  Address  by  Robert  L.  Owen,  United  States  Senator  from  Oklahoma, 
at  the  dinner  of  the  Academy  of  Political  Science,  November  12,  1915. 
Printed  in  the  Proceedings.  6:48-60.  October,  1915. 


AMERICAN   MERCHANT   MARINE  103 

as  harmful  as  is  sometimes  suggested,  present  to  Congress  the 
reasons  which  would  justify  a  change  in  these  laws. 

Fifth,  Congress  has,  by  the  ship  registry  bill,  opened  the 
American  registry  to  ships  built  abroad,  and  in  this  way  quite 
a  large  number  of  vessels  have  been  added  to  the  American 
merchant  marine,  subject  to  the  laws  of  the  United  States,  and 
have  at  least  added  to  the  statistical  respectability  of  the  Ameri- 
can merchant  marine. 

Sixth,  during  the  last  Congress  a  bill  was  presented  authoriz- 
ing the  United  States  government  to  take  stock  in  a  corporation 
to  be  organized  under  the  patronage  and  control  of  the  govern- 
ment of  the  United  States,  with  a  capital  of  ten  millions  of 
dollars  and  the  right  to  use  thirty  millions  of  Panama  bonds 
to  enlarge  the  enterprise,  the  government  of  the  United  States 
taking  the  bonds  of  the  corporation  in  lieu  of  such  advances. 

This  latter  enterprise  has  various  obvious  advantages: 

First,  these  ships  would  meet  the  needs  of  American  foreign 
commerce  between  the  United  States,  Central  and  South  Amer- 
ica, and  the  Orient,  in  which  there  is  no  adequate  service  by 
privately-owned  ships. 

Second,  these  ships  would  be  manned  by  American  seamen 
paid  American  wages,  having  the  ideals  and  language  of  the 
United  States,  having  a  patriotic  love  for  the  United  States  and 
its  interests. 

Third,  such  ships  would  comprise  a  very  important  naval 
auxiliary  and  could  serve  instantly  in  case  of  foreign  war  as 
colliers,  ammunition  boats,  supply  boats,  transports,  oilers,  hos- 
pitals, and  repair  shops,  all  necessary  in  times  of  war.  They 
would  be  manned  by  patriotic  Americans  and  not  by  foreigners 
without  interest  in  America  and  ignorant  of  the  language. 

These  boats  would  be  self-supporting  and  would  comprise  an 
auxiliary  naval  merchant  marine.  They  would  have  an  extreme 
mobility.  They  could  be  sent  to  develop  new  lines  of  commerce 
where  at  present  we  have  no  regular  mail  service,  no  regular 
freight  service,  no  regular  passenger  service,  and  consequently 
no  reliable  commercial  ties.  Whenever  private  capital  could  be 
attracted  to  fill  a  field  thus  developed,  these  boats  could  be  used 
to  develop  a  new  field. 

We  have  a  right  to  believe  that  they  would  pay  well  from 
the  beginning,  because  we  know  that  the  exports  of  the  United 


104  SELECTED   ARTICLES 

States  to  many  of  the  South  American  countries  have  doubled 
in  the  last  year,  and  that  there  is  an  enormous  field  of  com- 
merce, of  imports  and  exports,  immediately  available  whenever 
reliable  channels  of  intercommunication  shall  have  been  estab- 
lished. The  exports  from  Europe  to  South  America  in  1914 
were  $667,000,000. 

The  representatives  of  the  South  American  countries,  at  the 
Pan-American  financial  conference  held  in  Washington  last 
May — eighteen  American  nations  participating — declared  their 
eagerness  to  cooperate  with  the  United  States  in  improving  the 
trade  and  commercial  relations  between  the  United  States  and 
the  Central  and  South  American  nations.  There  is  no  doubt 
that  these  countries  will  extend  every  possible  facility  in  the 
forms  of  docks,  terminals,  and  favoring  laws. 

Until  the  passage  of  the  Federal  Reserve  Act,  American  pro- 
ducers and  shippers  had  no  adequate  banking  facilities  in  Brazil, 
Argentina,  or  other  South  and  Central  American  nations;  no 
adequate  credit  facilities,  and  no  adequate  American  business 
representatives.  But  under  the  Federal  Reserve  Act  a  number 
of  American  banks  have  already  been  established  in  South 
America  and  many  more  are  in  contemplation.  Through  these 
American  institutions  accurate  and  reliable  information  as  to 
the  credit  of  purchasers  can  be  obtained;  credits  can  be  ex- 
tended, and  exchange  can  be  afforded.  But  if  American  ship- 
pers must  rely  upon  the  British  ship  or  the  German  ship  as  a 
means  of  competing  with  British  and  German  goods,  American 
shippers  would  be  absolutely  at  the  mercy  of  those  whose  sym- 
pathies would  be  against  the  success  of  the  American  shipper  and 
altogether  in  favor  of  his  competitor,  the  British  or  German 
shipper. 

I  am  informed  that  one  of  the  great  banking  houses  in  New 
York  made  a  critical  examination  of  the  freight  service  be- 
tween the  United  States  and  South  America  by  way  of  Europe, 
and  ascertained  that  American  goods  were  delivered  from  one 
to  three  weeks  behind  European  goods;  that  American  goods 
were  not  accorded  the  same  careful  treatment  given  to  European 
goods  destined  for  southern  markets,  and  that  there  were  other 
discriminations  injurious  to  the  American  shipper,  having  a  strong 
tendency  to  make  the  commercial  relationship  between  the  ship- 
per from  the  United  States  and  the  buyer  in  South  America 
unsatisfactory.  It  is  obviously  of  the  highest  importance  to  the 


AMERICAN   MERCHANT   MARINE  105 

development  of  the  United  States,  the  enlarging  of  its  foreign 
commerce,  that  we  should  have  stability  and  efficiency  of  the 
freight,  mail  and  passenger  services  between  the  two  countries. 
We  must  have  regular  sailings  from  our  ports  to  Central  and 
South  American  ports.  We  must  have  prompt  and  efficient 
delivery  of  our  exports  to  those  countries  and  our  imports  from 
those  countries.  We  must  have  reasonable  freight  rates. 

It  has  been  objected  that  the  government  should  not  go  into 
the  shipping  business,  because  the  government  cannot  success- 
fully handle  the  shipping  business.  The  government  has"  handled 
the  shipping  business  successfully  between  New  York  and  Panama 
for  many  years.  It  has  handled  the  Panama  Railroad  Company 
successfully.  It  has  handled  irrigation  plants  successfully.  It 
has  handled  cement  plants  successfully.  It  is  handling  the  post 
office  business  successfully,  and  is  doing  fairly  well  with  the 
express  business  under  parcels  post.  It  would  not  be  a  serious 
objection  if  the  government  did  not  make  money  out  of  the  naval 
auxiliary  merchant  marine,  because  the  establishment  of  the 
auxiliary  naval  merchant  marine  is  necessary  for  our  prepared- 
ness, and  these  boats  can  be  more  economically  used  in  the 
merchant  marine  than  to  lie  idle  and  rotting  in  the  harbor. 

It  is  said  that  the  government  ought  not  to  compete  with  pri- 
vate individuals.  The  government  would  not  be  competing  with 
private  individuals  in  occupying  a  field  which  private  individuals 
have  not  occupied.  Private  individuals  cannot  afford  to  take  the 
risk  of  opening  up  a  new  line  of  commerce  on  the  east  and  west 
shores  of  South  America.  Private  individuals  have  abandoned 
the  trade  territory  occupied  by  the  Pacific  Mail  Steamship  Com- 
pany, and  have  left  the  imports  and  exports  of  the  Pacific  coast 
without  adequate  service. 

When  the  war  broke  out  the  leading  business  men  of  the 
country  appealed  to  the  government  of  the  United  States  to 
establish  a  bureau  of  war-risk  insurance  to  insure  American 
vessels  and  American  cargoes  against  war  risks.  The  govern- 
ment did  so  successfully  and  profitably. 

The  highest  modern  function  of  government  is  to  use  the 
combined  power  of  the  people  to  promote  their  happiness  and 
prosperity,  to  promote  their  commerce,  and  give  a  constant,  sta- 
ble field  of  employment  to  their  productive  energies.  The  enor- 
mous volume  of  products  which  the  people  of  the  United  States 
can  produce  will  be  stimulated  to  a  maximum  by  furnishing  a 


106  SELECTED   ARTICLES 

foreign  market  on  as  fair  terms  as  the  citizens  of  any  other 
nation  of  the  world  can  obtain  in  times  of  peace  or  in  times 
of  war.  If  we  leave  our  citizens  and  our  commerce  dependent 
upon  the  merchant  marine  of  Great  Britain  and  other  nations, 
we  need  not  be  surprised  if  the  merchants  of  those  nations  take 
the  trade  of  the  world  and  bottle  up  our  products  within  our 
own  land.  I  believe,  therefore,  that  the  best  thing  Congress 
could  do  would  be  to  establish  a  naval  auxiliary  merchant 
marine,  owned  by  a  corporation,  the  majority  stock  of  which 
is  owned  by  the  government;  that  this  corporation  should  be 
in  the  control  of  a  shipping  board;  that  the  most  modern  ships 
in  the  world  should  be  built  for  this  service,  as  speedily  as 
possible;  that  we  should  prepare  American  seamen  to  man  these 
boats  at  fair  compensation  and  should  educate  a  naval  reserve 
on  them;  that  we  should  establish  with  these  boats  lines  of 
commerce  and  regular  sailings  at  fair  rates  for  freight,  passenger 
service,  and  mail,  between  our  ports  and  those  of  Mexico,  Cen- 
tral and  South  America,  and  the  Orient;  that  we  should  stand- 
ardize this  work  and  ascertain  through  this  work  what  would 
be  a  fair  charge  for  ocean  freights. 


THE  RESTORATION  OF  OUR  MERCHANT 
MARINE1 

Before  I  discuss  the  shipping  bill  now  before  Congress,  which 
I  have  been  fighting  to  pass  for  the  last  two  years,  I  desire 
to  give  my  views  generally  on  what  will  build  up  an  American 
merchant  marine.  I  read  with  interest  the  proceedings  of  the 
United  States  Chamber  of  Commerce  in  Washington  a  few  days 
ago.  Unfortunately,  from  start  to  finish,  it  was  devoted  to  the 
advocacy  of  ship  subsidy.  Gentlemen,  think  of  it,  a  ship  subsidy 
urged  at  this  time,  when  any  man  who  owns  a  vessel  in  the 
shape  of  a  ship,  steam  or  sail,  can  get  such  prices  for  his  service, 
that  if  the  government  were  to  give  him  a  subsidy  it  would  be  a 
shame  to  take  the  money.  (Applause.)  And  yet  this  great 
body,  this  National  Chamber  of  Commerce,  stood  there  and 
asked  for  a  subsidy.  You  know,  Mr.  Chairman,  and  I  know, 
that  the  greatest  absurdity  today  would  be  to  go  before  Con- 


1  Address  by  Hon.  Rufus  Hardy,  Congressman,  Sixth  Texas  District, 
before  the  Economic  Club  of  Boston,  February  23.  1916.  Printed  in  the 
National  Economic  League  Quarterly.  1:12-27.  May,  1916. 


AMERICAN   MERCHANT  MARINE  107 

gress  in  behalf  of  the  shipowners  and  say,  "My  clients,  those  I 
represent,  are  receiving  now  in  freights  from  100  to  1,000  per 
cent  more  than  they  ever  did  before,  but  I  ask  you  earnestly 
to  give  them  a  subsidy  in  addition."  You,  gentlemen,  are  in 
this  section  of  the  Union  that  has  devoted  more  of  its  energy 
to  upbuilding  the  merchant  marine  than*  any  other  section,  and 
I  ask  you  what  do  you  think  of  such  a  request  ?  The  great  body 
of  our  people  who  have  not  been  directly  interested  in  shipping 
have  contributed  millions  to  improving  our  harbors  and  canals 
and  rivers  so  that  your  ships  and  the  ships  of  commerce  gen- 
erally may  safely  enter  and  traverse  them.  That  is  sometimes 
called  a  subsidy  by  those  who  seek  to  find  countenance  for  their 
demand,  but  it  is  not  a  subsidy.  It  is  a  public  improvement. 
It  does  not  go  into  the  pocket  of  any  particular  individual  or 
corporation.  A  subsidy  is  not  distributed  in  that  way.  The 
beneficiaries  of  a  subsidy  hang  like  hungry  dogs  around  a  table 
waiting  for  the  crumbs  to  fall. 

I  must  tell  you  that  I  was  glad  to  find  your  chairman  able 
to  state  and  stating  so  fairly  the  facts  in  regard  to  England's 
merchant  marine.  He  tells  you  that  England  never  has  given 
a  subsidy  to  her  cargo  ships.  She  has  paid  certain  sums,  but 
for  every  dollar  she  has  ever  given  she  has  demanded  full 
service  in  return.  She  has  built,  under  the  direction  of  her 
admiralty,  certain  ships  which  might  be  easily  turned  into  war 
vessels  and  so  constructed  that  they  could  not  be  very  eco- 
nomically operated  in  commerce,  but  yet  constructed  with  a  view 
of  avoiding  the  expense  of  keeping  them  idle  in  times  of  peace 
while  having  them  ready  for  a  time  of  war;  and  a  few  vessels, 
not  amounting  to  5  per  cent  of  Britain's  total  tonnage,  have 
received,  not  a  subsidy,  but  what  is  in  effect  very  fair  and  just 
compensation  for  carrying  the  mails  and  for  other  public  service 
rendered  and  service  contracted  to  be  rendered  in  certain  con- 
tingencies. But  suppose  it  could  be  shown  that  England  did 
subsidize  some  of  her  fast  ships,  how  would  that  help  the  other 
and  unsubsidized  vessels  of  her  vast  marine?  How  would  it 
help  Mr.  Smith  operating  his  vessel,  if  Mr.  Jones,  operating  a 
vessel  in  competition  with  him,  got  a  subsidy?  Pardon  me  for 
discussing  this  question  at  some  length.  I  do  so  because  it 
has  a  fascination  for  the  shipowners,  and  it  is  shrewdly  pushed 
to  the  fore  by  the  shipbuilding  interests  which,  under  our  present 
laws,  have  a  monopoly  of  building  ships  for  the  American  flag. 


io8  SELECTED  ARTICLES 

Special  favor  and  privilege  are  always  fascinating,  and  the  recipi- 
ents of  them  are  always  overflowing  with  reasons  to  justify 
them.  Our  shipbuilders  have  always  enjoyed  a  monopoly  of 
our  flag  by  prohibitory  laws.  This  did  not  matter  so  long  as 
they  built  as  good  or  better  ships  for  the  money  than  any  other 
builders,  but  when  the  time  came,  as  it  did  come,  that  they 
demanded  a  price  of  50  to  100  per  cent  more  than  the  foreign 
shipbuilder  demanded  for  the  same  ship,  then,  in  the  language 
of  James  J.  Hill,  competition  in  our  ships,  that  is  under  our 
flag,  with  foreign  ships,  became  impossible.  Then  the  ship- 
builders and  owners  of  America  began  to  look  for  some  way 
to  do  business.  They  could  do  it  in  our  coastwise  trade,  of 
course,  because  no  other  ships  were  allowed  there,  but  on 
the  high  seas  it  was  different.  If  shipowners  alone  had  been 
originally  concerned  the  way  was  easy.  All  we  had  to  do  was 
simply  to  let  the  American  buy  his  ship  here  or  elsewhere,  and 
so  pay  no  more  for  it  than. did  his  foreign  competitor.  But  our 
shipbuilder  at  that  suggestion  threw  up  his  hands  in  holy 
horror.  He  declared  he  could  not  compete  with  the  foreign 
builder,  and  that  if  you  let  American  citizens  buy  ships  where 
they  please  and  put  them  under  our  flag  and  sail  coastwise  as 
well  as  over-seas  they,  the  shipbuilders,  would  be  destroyed, 
and  yet  they  realized  that  the  ship  which  carried  the  commerce 
between  nations  must  do  so  because  it  carried  it  cheapest,  and 
that  the  cheapest  ship  made  the  cheapest  transportation.  The 
issue  was  clear  cut.  It  was  either  put  our  shipowner  on  equal 
terms  with  the  foreign  shipowner,  or  give  up  all  participation 
by  our  ships  in  the  foreign  trade  and  hold  only  to  our  coast- 
wise trade  from  which  we  could  exclude  the  foreigner  by  law. 
Since  the  coastwise  trade  was  about  three-fourths,  now  nearly 
seven-eighths,  of  all  our  trade,  the  decision  was  quick  and  easy 
for  our  shipbuilders.  They  chose  to  hold  the  monopoly  of 
building  for  our  coastwise  trade  and  let  the  foreign  trade  go 
to  the  foreign  flags;  and  American  merchants  and  the  American 
public  acquiesced.  It  was  a  blind  and  foolish  policy,  but  urged 
with  many  plausible  arguments.  They  said,  "Let  us  enjoy  our 
coastwise  monopoly  and  by  building  many  ships  we  will  soon 
bring  down  the  price  to  the  level  of  the  foreign  price,  but  if  you 
open  up  the  ship  market  you  will  utterly  destroy  us,  and  then 
the  foreign  shipbuilder  will  double  his  price;  and  besides," 
they  said,  "if  war  should  come  we  would  have  no  shipyards  and 
be  at  the  mercy  of  our  enemy."  Finally  they  said  shrewdly, 


AMERICAN   MERCHANT   MARINE  109 

"if  American  capital  wants  to  engage  in  foreign  transportation 
it  can  buy  the  foreign  ship,  put  it  under  the  foreign  flag,  and 
so  do  the  business."  And  this  is  what  American  capital  did. 
Later,  when  the  absence  of  our  flag  from  the  high  seas  became 
a  scandal,  we  began  to  hear  talk  about  our  ships  being  driven 
out  by  antiquated  navigation  laws  and  the  heavy  burdens  im- 
posed by  our  laws  on  our  shipping.  All  this  talk  was  vague 
and  general.  It  was  never  definite  or  specific,  and  it  was  always 
accompanied  by  a  clamor  for  subsidy.  The  subsidist  makes  his 
plea  on  two  grounds:  first,  our  antiquated  navigation  laws, 
which  he  never  points  out  and  never  seeks  to  amend;  and  sec- 
ond, the  high  wages  we  pay  our  seamen.  I  tell  you  without 
fear  of  contradiction  that  we  have  no  antiquated  navigation 
laws  that  impede  our  navigation  save  the  one  which  forbids  our 
merchantmen  from  buying  the  cheapest  ship  he  can  for  the 
money.  On  the  second  point,  the  question  of  wages,  it  seems 
never  to  occur  to  him  that  England  also  is  a  high-wage  country, 
comparatively.  Her  wages  are  higher  than  those  of  Germany, 
France,  Russia,  Norway,  Sweden,  Holland  or  Italy,  and  yet 
she  builds  cheaper  and  better  ships  than  any  of  them  and  car- 
ries more  of  the  commerce  of  the  world  than  all  of  them  put 
together,  and  she  carries  that  commerce  without  subsidy. 

Senator  Burton  in  a  speech  in  the  Fifty-ninth  Congress,  de- 
clared that  no  nation  had  ever  built  up  a  great  merchant  marine 
on  subsidy,  and  he  is  a  profound  student  of  the  subject.  My 
own  study  of  the  question  has  fully  convinced  me  of  the  truth 
of  his  assertion.  England  has  won  by  the  skill  and  bigness  and 
boldness  of  her  enterprise.  We  must  win  in  like  manner  or  not 
at  all,  but  if  we  would  win,  we  must  take  off  the  weights  and 
handicaps  that  prevent  us  from  running  an  equal  race,  and  then 
enter  the  list  of  competitors  seeking  to  furnish  the  transporta- 
tion of  the  world  just  as  we  have  entered  the  list  of  competitors 
seeking  to  furnish  the  world  with  the  corn,  the  wheat,  the  shoes, 
the  machinery,  and  all  the  other  products  of  labor. 

It  is  contended  sometimes  that  we  now  have  let  foreign-built 
ships  come  under  our  flag  by  the  lately  passed  Panama  Act. 
I  want  you  clearly  to  understand  the  answer.  We  have  done 
no  such  thing.  We  did  pretend  to  do  it,  but  it  was  only  pre- 
tense. We  passed  a  bill  authorizing  the  American  merchantman 
to  buy  a  ship  wherever  he  pleased,  but  in  the  same  bill  we 
said  that  if  it  was  built  anywhere  else  than  in  the  United  States 
he  cpuld  only  sail  it  in  the  foreign  trade.  Now  what  does  that 


1  io  SELECTED  ARTICLES 

mean?  It  means  he  might  put  our  flag  over  it;  but  when  he 
does  so,  what  advantage  does  he  get  by  doing  it?  Not  a  rap 
of  your  finger.  Under  this  fraud  of  a  law  he  cannot  do  any- 
thing under  our  flag  that  he  could  not  do  under  the  foreign  flag. 
He  may  bring  goods  from  Liverpool  to  New  York  or  Boston 
and  carry  goods  back  to  Liverpool.  He  could  do  that  under  the 
foreign  flag.  He  gains  absolutely  nothing.  What  does  he  lose? 
First,  he  must  change  his  officers  when  he  changes  to  our  flag. 
These  he  perhaps  cherishes  because  they  have  been  faithful  and 
serviceable.  That  is  his  first  difficulty.  What  next?  He  loses 
every  distinctive  privilege  he  had  under  the  flag  he  transfers 
from.  If  it  is  the  English  flag  he  loses  the  privilege  of  sailing 
in  the  coastwise  trade  of  some  dozen  different  nations  with 
whom  England  has  treaties  of  comity.  And  moreover,  he  loses 
the  privilege  of  sailing  in  the  coastwise  trade  of  Canada. 
It  is  safe  to  say  that  there  is  no  nation  under  whose  flag  a 
vessel  does  not  enjoy  some  especial  advantage,  small  or  great, 
and  it  is  certain  that  by  the  law  in  question  we  offer  absolutely 
no  inducement  to  cause  a  shipowner  under  a  foreign  flag  to 
part  with  even  the  smallest  advantage.  It  is  said  that  we  in 
the  South  are  careless  in  business  matters,  but  that  your  people 
are  not.  As  a  New  England  business  man,  if  you  owned  a  ship 
under  the  English  flag  or  any  other  flag,  would  you  change  it 
to  the  American  flag  when  you  understood  the  simple  truth 
as  I  have  told  it  to  you  about  this  so-called  "free-ship  law"? 
The  committee  I  am  on  reported  out  that  law  after  I  had  tried 
and  failed  to  get  them  to  let  such  ships  engage  in  our  coastwise 
trade.  I  told  them  that  not  a  single  ship  would  come  under  our 
flag  under  its  provisions,  and  no  ship  did,  until  the  dangers  of 
the  present  war  came,  and  then  some  of  them  took  advantage 
of  that  law  solely  on  account  of  our  neutral  position,  and  they 
came  with  the  privilege  of  retaining  their  officers  because  the 
law  requiring  American  officers  was  suspended  to  enable  them 
to  do  so. 

There  is  one  other  familiar  subject  I  wish  to  talk  about  just 

2  little;   the  subject   of   discriminating  duties.    Your  chairman 
has   said  that  discriminating  duties  have   been  tried   by  every 
nation  on  earth  and  have  failed.    That  is  true.    In  our  early 
history  Jefferson  said  that  as  long  as  other  nations  levied  dis- 
criminating  duties    against    us,    we    must   maintain    retaliatory 
duties  against  them ;  and  that  fact  has  of  late  years  been  falsely 
quoted  to   show  that   Jefferson   favored   discriminating  duties. 


AMERICAN   MERCHANT   MARINE  in 

The  whole  truth  is  this:  when  the  original  thirteen  states  had 
separate  shipping  laws  they  found  that  England  and  other  na- 
tions were  discriminating  against  them  by  imposing  heavy  ton- 
nage dues  on  American  ships  entering  their  ports,  and  also 
heavy  tariff  duties  on  goods  imported  in  such  ships.  Then  it 
was  found  that  when  a  state  tried  separately  to  retaliate  she 
could  not,  because  if  Boston,  for  instance,  imposed  a  high  duty 
and  New  York  a  lower  duty,  Boston  lost  her  trade  and  New 
York  got  it.  New  York  and  Massachusetts  could  not  agree,  and 
if  they  had  agreed,  then  Baltimore  could  come  down  in  her 
dues  and  duties,  and  get  the  trade.  This  was  the  situation  when 
our  Federal  Constitution  was  framed.  It  was  one  of  the  things 
that  helped  to  secure  its  adoption.  All  the  states  desired  to  have 
one  central  power  that  could  put  in  operation  a  uniform  policy 
on  tonnage  dues  and  tariff  duties,  and  so  meet  the  laws  of 
foreign  states  which  discriminated  against  them.  Among  the 
first  laws  passed  by  Congress  was  therefore  one  enacting  re- 
taliatory discriminating  duties  and  tonnage  dues.  But  as  early 
as  1802,  a  movement  was  started  to  repeal  that  law  and  place 
in  its  stead  upon  our  statute  books  a  law  authorizing  the  Presi- 
dent to  negotiate  treaties  abolishing  our  discriminating  duties 
as  to  such  nations  as  would  abolish  theirs  against  us.  But  it 
so  happened  that  at  this  time  the  French  Revolution  was  disturb- 
ing all  the  world.  Laws  and  treaties  were  everywhere  asleep 
in  international  affairs.  The  Napoleonic  wars  were  sweeping 
the  ocean  of  the  merchantmen  of  nearly  all  European  nations, 
and  our  ships  had  all  they  could  do.  They  had  a  harvest.  But 
just  as  soon  as  European  peace  was  proclaimed  the  leading  men 
of  all  parties  in  1815  in  the  United  States  joined  in  the  passage 
of  an  act  to  'abolish  discriminating  duties  against  all  nations 
that  would  abolish  them  as  to  us.  The  President  was  authorized 
to  negotiate  treaties  to  that  end.  Some  eighteen  treaties  were 
negotiated  in  the  next  ten  years.  There  were  many  qualifying 
clauses  in  these  treaties  not  necessary  now  to  discuss.  In  this 
country  all  parties  and  the  leaders  of  all  parties  continually 
endeavored  to  make  the  sea  more  and  more  free,  but  England, 
with  her  vast  colonial  possessions,  continued  to  refuse  to  meet 
our  overtures.  We  were  particularly  anxious  to  trade  freely 
with  the  West  Indies,  and  England  was  anxious  that  we  should 
not.  She  practiced  all  sorts  of  discriminations  against  our  ship- 
ping. President  John  Quincy  Adams  and  his  Secretary  of  State, 
Henry  Clay,  sought  every  way  to  make  a  treaty  of  reciprocity 


112  SELECTED   ARTICLES 

with  her  and  to  abolish  these  discriminations.  They  failed. 
They  sent  special  representatives  to  England.  That  failed,  but 
in  1828  President  Andrew  Jackson  sent  a  special  agent  to  Eng- 
land with  authority  and  instructions  to  negotiate  a  treaty  and 
with  a  message  to  the  effect  that  a  change  had  taken  place  in 
the  American  administration,  that  he  meant  business ;  and  the 
treaty  was  finally  made.  England  was  the  last  great  nation  to 
give  in,  and  from  1828  down  to  this  day  we  have  practically 
neither  laid  nor  paid  discriminating  duties. 

I  could  go  into  the  subject  at  great  length  and  show  you 
how  such  duties  obstructed  commerce  and  irritated  and  aggra- 
vated nations  and  injured  peoples.  I  could  show  you  how  it 
came  to  pass  that  an  owner  of  cotton  who  must  ship  it  from 
Charleston,  South  Carolina,  to  Europe,  found  it  better  to  pay 
an  exorbitant  freight  and  send  it  on  a  foreign  ship  than  to 
send  it  on  American  vessels  free,  and  how  England  finally 
closed  her  West  Indian  ports  to  our  ships.  It  is  enough  to 
say  that  discriminating  duties  force  cut-throatism  and  obstruct 
commerce,  and  we  do  not  want  them.  What  we  want  is  to 
struggle  with  the  world  on  equal  terms  on  the  sea  for  our  part 
of  its  carrying  trade  and  its  commerce. 

The  shipbuilding  and  coastwise  interests  are  constantly  talk- 
ing about  our  antiquated  navigation  laws  in  the  public  press  as 
the  cause  of  the  decay  of  our  merchant  marine.  I  have  made 
them  ashamed  to  talk  that  way  when  they  come  before  our  com- 
mittee because  I  have  demanded  that  they  point  out  the  laws 
they  complain  of,  and  shown  them  that  they  have  never  asked 
for  the  repeal  of  a  single  law.  Your  chairman  tonight  is  the 
first  man  interested  in  shipping  who  has  ever  in  my  hearing 
named  the  real  antiquated  law  which  has  killed  our  merchant 
marine.  The  shipbuilder  will  not  tell  you  what  it  is,  but  he 
knows.  I  have  had  them  tell  me  in  years  gone  by  that  our  law 
required  our  seamen  to  be  given  better  accommodations  than  the 
seamen  of  any  other  nation  on  earth.  There  is  a  seaman  here 
(Mr.  Furuseth)  who  will  tell  you  that  is  not  true.  I  looked  at 
the  law.  Our  law,  until  last  year,  required  72  cubic  feet  of 
space  for  each  member  of  the  crew  to  eat,  live,  and  sleep  in. 
England's  law  requires  120  feet,  and  France  and  nearly  every 
other  nation  requires  from  100  to  120  feet.  So  we  have  not  re- 
quired better,  but  poorer,  quarters  for  our  seamen.  Sometimes 
they  told  me  that  our  law  prescribed  an  excessive  scale  of  food. 


AMERICAN   MERCHANT   MARINE  113 

Look  at  the  English  food  scale,  and  there  is  hardly  any  differ- 
ence. We  have  a  law,  it  is  true,  prescribing  a  moderate  schedule 
of  food,  but  then,  this  is  allowed  to  be  varied  by  the  terms  of  the 
contract  under  which  the  seamen  enlist,  and  it  is  always  varied. 
(Applause.)  When  I  have  shown  these  things  and  asked  again 
what  laws,  they  are  dumb  as  oysters  because  they  cannot  find 
a  law  on  our  statute  books  that  cripples  our  merchant  marine 
except  the  law  which  your  chairman  pointed  out,  and  which  I 
have  pointed  out  tonight,  and  that  is  the  law  which  prevents  you 
from  buying  a  ship  where  you  please  and  using  it  in  all  our 
trades.  The  shipbuilders  and  coastwise  shipowners  will  not 
point  out  that  law  because  they  do  not  want  it  repealed.  Let  me 
show  you  how  impossible  it  is  for  us  to  have  a  merchant  marine 
until  that  law  is  repealed.  It  was  testified  before  our  committee 
that  a  ship  costing  $1,000,000  here  would  cost  $700,000  laid  down 
on  the  Clyde.  Now  if  you  buy  the  ship  here,  it  will  cost  you 
$1,000,000  and  you  can  sail  it  as  an  American  ship  in  every  trade. 
If  you  buy  it  on  the  Clyde  and  put  the  British  flag  on  it  you  pay 
$700,000.  Ships  are  bought  on  borrowed  money.  That  means 
that  on  the  American  ship  you  pay  interest  on  $300,000  more 
than  you  would  on  the  British  ship,  and  if  you  pay  5  per  cent 
interest  it  means  $15,000  more  interest  per  year.  It  means  also 
that  you  pay  insurance  on  $300,000  more,  which  I  think  is  gen- 
erally about  5  per  cent,  and  which  would  make  your  insurance 
$15,000  more  per  year.  A  ship  is  supposed  to  last  twenty  years, 
and  5  per  cent  is  charged  off  annually  for  depreciation.  Repairs 
are  also  estimated  to  cost  annually  5  per  cent  on  the  value  of  the 
vessel.  So  by  buying  the  American  ship  you  will  pay  annually 
$15,000  more  interest,  $15,000  more  insurance,  $15,000  more  for 
repairs  and  $15,000  more  for  depreciation,  all  told,  $60,000  more 
per  year  under  this  antiquated  law  for  the  blessed  privilege  of 
sailing  your  ship  under  the  American  flag  with  the  full  privilege 
of  an  American  vessel.  As  a  man  that  is  not  more  blind  than  the 
cow  that  can  keep  in  the  road,  I  ask  this  simple  question  of  you : 
If  you,  the  most  patriotic  man  in  America,  were  thinking  of 
going  into  the  overseas  carrying  trade,  would  you  buy  the 
American  ship  and  pay  this  $300,000  excess  initial  cost,  and  this 
$60,000  excess  annual  charge  every  year?  Business  men  in  the 
carrying  trade  are  not  fools,  and  you  see  just  as  well  as  I  do 
why  our  merchant  marine  died. 

The  live  present  question  for  us  to  solve  is:  If  you  give  the 

10 


ii4  SELECTED   ARTICLES 

American  shipowner  the  best  and  cheapest  ship  in  the  world, 
can  he  successfully  compete  in  the  foreign  trade  under  our  flag? 
If  you  give  him  all  the  privileges  pertaining  to  the  American 
flag  and  place  no  more  restrictions  upon  him  than  are  placed 
upon  foreign  ships  entering  our  ports,  I  answer  yes.  And  I 
will  tell  you  why.  Next  to  America,  England  pays  the  highest 
wages  among  all  the  great  nations.  She  pays  higher  wages  than 
Germany  or  France.  Far  higher  wages  than  Italy  or  Japan,  and 
yet  her  merchant  marine  is  triumphant  over  those  nations.  I 
have  said  this  before  but  repeat  it  in  order  to  say  that  what 
England  has  done,  we  can  do.  What  England's  shipbuilders  have 
done,  ours  can  do.  What  our  steel  and  iron  manufacturers  have 
done,  our  shipbuilders  can  do.  Our  iron  and  steel  manufacturers 
today,  notwithstanding  our  wages,  do  turn  out  the  cheapest 
products  in  the  world.  No  man  will  do  a  thing  that  is  hard  to 
accomplish  unless  he  has  to.  Just  so  long  as  you  pamper  and 
pet  your  shipbuilders  and  ship  operators,  and  tell  them  they  do 
not  have  to  enter  competition,  they  will  sit  back,  but  when  you 
tell  them  they  are  full-grown  and  must  get  out  and  compete  for 
success  then  America  will  again  build  ships  and  sail  them  for 
herself  and  for  the  world.  (Applause.)  So  long  as  our  builders 
can  charge  the  highest  price  in  the  world  for  ships,  and  yet 
furnish  them  for  seven-eighths  of  our  trade,  they  will  do  it.  I 
wish  you  could  all  read  Mr.  Redfield's  testimony  before  our  com- 
mittee. There  is  a  condition  now  like  that  on  railroads  when  a 
new  motive  power  is  found,  and  the  old  locomotives  have  to  be 
put  into  the  discard.  It  is  a  condition  similar  to  that  of  1855  to 
'60,  when  the  iron  and  steel  ship  began  to  replace  the  old  wooden 
ship,  and  when  England  began  to  take  the  lead  of  us  with  her 
new  ships.  You  know  many  an  invention  has  failed  to  find  ac- 
ceptance because  it  would  displace  something  already  in  use.  The 
old  world,  the  world  that  has  been  carrying  the  foreign  com- 
merce of  the  United  States,  has  on  hand  old-style  ships,  old  ma- 
chinery and  small  ships.  They  will  cling  to  them.  They  will 
hate  to  scrap  them.  We  must  build  a  new  class  of  ships,  and 
the  material  and  opportunity  is  present  at  our  hands.  I  know 
little  about  machinery,  but  if  you  will  read  the  testimony  of 
Secretary  Redfield,  you  will  find  that  by  standardizing;  by  using 
our  great  steel  and  iron  factories  to  make  wholesale  the  separate 
parts  which  can  be  assembled  and  put  together  where  wanted, 
and  by  using  the  internal  combustion  engine,  by  using  oil  instead 


AMERICAN    MERCHANT   MARINE  115 

of  coal  for  fuel,  by  economizing  space  in  the  new  construction 
and  by  the  use  of  modern  apparatus  for  loading  and  unloading, 
and  by  building  larger  ships,  our  shipbuilders  can  build  ships  that 
will  make  it  easy  for  us  to  take  the  sea  if  we  try.  Now  is  our 
chance. 


GOVERNMENT  SHIP  PURCHASE  BILL1 

It  is  assumed  that  government  ownership  is  something  new 
under  the  sun.  Those  who  urge  this  objection  assume  that  the 
American  people  are  ignorant  of  the  many  activities  of  the  gov- 
ernment in  which  the  principle  is  applied.  Private  enterprise 
failed  to  build  the  Panama  Canal,  and  the  government  took  over 
that  great  enterprise  and  has  completed  the  canal  in  the  interest 
of  the  world's  commerce,  and  for  the  national  defense.  The  gov- 
ernment owns  and  operates  the  Panama  Railroad.  It  was  re- 
located and  rebuilt  within  the  last  five  years  at  a  cost  of  about 
ten  millions  of  dollars ;  also  owns  and  operates  the  Panama  Rail- 
road Steamship  Company's  fleet  of  passenger  and  freight  steam- 
ers from  New  York  to  Panama,  and  has  done  so  for  eleven  years 
past.  The  average  rate  of  freight  between  New  York  and  the 
Canal  Zone  at  the  time  the  government  took  over  the  operation  of 
the  line  was  $8  per  ton.  This  has  been  gradually  reduced  to  the 
present  rate  of  $3.50  per  ton  on  rough  goods  and  $4.50  per  ton 
for  general  cargoes.  The  reductions  made  by  the  government 
line  similarly  affected  the  rates  of  the  other  lines,  all  of  which 
were  of  foreign  registry.  The  result  has  been  an  immense  sav- 
ing to  the  government  in  cost  of  construction  of  the  canal,  at 
the  same  time  no  complaint  has  been  made  that  the  reduced  rates 
have  not  been  remunerative  to  the  foreign  as  well  as  the  gov- 
ernment line. 

The  War  Risk  Insurance  Bureau  is  a  government  activity 
that  has  worked  well.  The  rates  are  one-eighth  of  I  per  cent. 
What  they  would  be  if  the  business  was  being  done  by  private 
companies  must  be  left  to  our  imagination.  The  government  has 
a  splendid  fleet  of  vessels  in  the  revenue  cutter  service  under 
control  of  the  treasury  department.  The  successful  and  economic 

1  By  Joshua  W.  Alexander,  Chairman  01  the  House  Committee  on 
Merchant  Marine  and  Fisheries.  Scientific  American.  112:177,185.  Feb- 
ruary 20,  1915. 


ii6  SELECTED   ARTICLES 

management  of  this  fleet  requires  as  high,  if  not  higher  order  of 
skill  and  efficiency  than  is  required  in  the  management  of  a  fleet 
of  merchant  vessels. 

The  government,  through  the  post  office  department,  has  taken 
over  a  large  part  of  the  transportation  business  heretofore  done 
by  the  express  companies,  and  at  a  reduction  of  cost  to  the 
American  people1  of  about  50  per  cent,  and  little  heed  would  be 
paid  to  a  demand  to  abolish  the  parcels  post  upon  the  ground 
that  the  government  should  not  engage  in  the  transportation 
business. 

The  government  is  building  a  railroad  in  Alaska  at  a  cost  of 
forty  millions  of  dollars  to  unlock  the  mineral  wealth  of  that 
great  storehouse  of  nature  for  the  benefit  of  all  the  people  rather 
than  have  it  exploited  for  the  benefit  of  the  few.  It  is  to  be 
hoped  if  the  government  goes  into  the  steamship  business  it  will 
prove  a  greater  success  than  has  the  operation  of  our  railroads 
under  private  control,  notably  the  New  Haven  under  the  Mellen 
regime. 

The  government  owns  the  greatest  wireless  system  in  the 
world,  under  the  control  of  the  Navy  Department,  which  not  only 
renders  efficient  service  for  all  the  departments  of  the  govern- 
ment, but  does  a  large  amount  of  commercial  business  at  reason- 
able rates,  and  could  do  more  without  additional  expense  of  op- 
eration. Yet  it  is  assumed  that  the  government  should  not  en- 
gage in  the  ownership  and  operation  of  shipping  in  the  foreign 
trade  to  meet  the  demands  of  our  growing  and  expanding  for- 
eign commerce,  although  private  capital  has  failed  for  fifty  years 
to  provide  such  service  for  the  American  people. 


THE  SHIPPING  BILL1 

Interesting  comments  on  the  proposed  shipping  bill  from  a 
New  England  railroad  man,  E.  D.  Codman,  formed  president  of 
the  Fitchburg  Railroad,  are  contained  in  an  interview,  which  is 
here  presented  for  the  first  time.  Mr.  Codman  believes  that  the 
government  merchant  marine  line  offers  the  only  means  of  over- 
coming the  discrimination  enforced  by  the  "shipping  pool"  against 
Atlantic  seaboard  ports. 

»By  W.  L.  Stoddard.  Railway  Age  Gazette.  59:1063.  December  3, 
1915- 


AMERICAN   MERCHANT   MARINE  117 

His  statement  follows: 

Because  I  see  no  other  way  of  relieving  Boston  of  the  burden 
of  discrimination  laid  upon  her  commerce  by  the  foreign-owned 
shipping  pool,  I  feel  I  can  endorse  the  idea  of  placing  in  com- 
mission a  government-owned  merchant  marine.  This  govern- 
ment-owned service  would  seem  to  be  able  to  deal  with  the 
present  situation  by  establishing  a  fair  transportation  rate  be- 
tween her  and  Europe.  At  the  same  time  it  would  give  ports 
such  as  Boston  a  chance  to  enter  on  equitable  terms  the  competi- 
tion for  the  trade  of  South  America. 

Take,  for  example,  the  rates  from  this  port  to  Liverpool.  We 
are  so  much  nearer  Liverpool  than  is  New  York  to  that  English 
port,  that  a  vessel  can  make  a  little  better  than  eleven  trips  from 
Boston  to  Liverpool  and  back  while  she  would  be  making  ten 
trips  from  New  York  to  Liverpool  and  back.  Applied  to  freight 
rates,  that  saving  in  time  should  make  a  difference  in  our  favor, 
and  applied  to  passengers  it  should  amount  to  enough  to  pay  a 
$5  fare  from  New  York  to  Boston  on  a  first-class  passenger. 

Yet  under  the  conditions  established  by  the  shipping  combine 
on  the  Atlantic,  the  railroads  carrying  a  shipment  from  Chicago 
to  be  sent  to  Liverpool  are  allowed  practically  only  the  same 
amount  to  deliver  that  shipment  on  the  docks  in  Boston  as  to 
deliver  it  on  the  pier  of  New  York.  On  both  exports  and  im- 
ports the  rates  allowed  the  railroads  are  so  low  as  to  afford  only 
a  slight  profit.  The  fact  that  there  is  less  profit  in  bringing  ship- 
ments by  rail  to  Boston  than  to  New  York  discourages  the  rail- 
roads from  developing  their  service  here.  Boston  is  the  victim 
of  this  discrimination.  Only  when  her  ocean  rates  to  Europe  are 
readjusted  on  a  basis  of  the  shorter  distance  can  she  hope  to  get 
a  fair  chance  at  the  export  business.  The  trouble  lies  in  the 
fact  that  the  foreign-controlled  shipping  pool  has  arbitrary  con- 
trol of  the  rates. 

If  the  United  States  government  will  build  and  operate,  or 
control  the  operation  of,  a  merchant  marine  that  will  enter  upon 
the  task  of  correcting  this  injustice,  the  whole  country  will  be 
the  gainer.  The  public  loses  whenever  the  rates  are  fixed  on 
any  other  basis  than  that  of  a  fair  price  for  the  service  rendered, 
as  in  the  case  of  ocean  freight  transportation.  Let  the  govern- 
ment put  on  a  line  of  ships  temporarily,  and  the  shipping  pool 
will  have  to  meet  the  rates  which  a  government  board  shall  de- 
termine are  fair  for  the  distance  from  Boston  to  Liverpool. 

I  do  not  believe  in  government  ownership  of  shipping  where 


n8  SELECTED  ARTICLES 

private  capital  can  and  does  render  equal  service  for  a  fair  price. 
But  I  do  believe  that  where  private  capital  is  so  combined,  and 
under  control  so  far  removed  from  the  action  of  public  opinion, 
as  is  the  case  with  our  transatlantic  shipping,  and  where  it  fails 
so  notably  to  render  the  public  a  reasonable  service  at  a  fair 
price,  the  government  should  step  in  with  its  own  corrective 
power.  The  corrective  power  in  this  instance  is  not  the  legal 
regulation  of  the  rates  to  be  charged  by  the  privately  owned  lines, 
but  the  temporary  establishing  of  a  shipping  line  which  will  set 
the  desired  standard  of  service. 


SHIP  PURCHASE  BILL1 

Since  August,  1914,  our  commerce  has  been  seriously  affected 
by  the  conditions  which  have  arisen  on  the  other  side  of  the 
water.  In  response  to  a  Senate  resolution,  the  Secretary  of 
Commerce  and  myself  made  a  report  to  the  Senate  a  few  days 
ago,  and  I  want  to  read  to  you  a  few  things  in  this  report 
which  will  convey  to  you  more  strikingly  than  any  words  of 
mine  can  possibly  convey,  the  conditions  that  affect  American 
shipping  interests,  American  farmers,  American  manufacturers, 
and  American  business  men  in  general  who  are  interested  in 
our  export  and  import  trade. 

These  letters  were  sent  to  the  two  departments  without  any 
direct  request  whatever  for  information.  They  were  voluntarily 
sent  in  response  to  the  request  in  the  Senate  resolution  that  these 
two  departments,  connected  as  they  are  with  the  shipping  and 
business  interests  of  the  country,  should  furnish  all  available 
information. 

Garcia  &  Company,  general  commission  merchants  of  San 
Francisco,  wrote  under  date  of  January  5  as  follows: 

We  beg  to  say  that  we  ourselves  have  shipped  in  the  last  two  months 
500  or  600  tons  of  dried  fruit  to  New  York  through  the  canal  at  Panama 
for  reshipment  to  Scandinavian  ports  and  also  to  Holland.  To  a  great 
extent  these  goods  have  been  in  New  York  for  a  long  time,  for  the  reason 
that  our  forwarding  agents,  Messrs.  C.  B.  Richards  &  Company,  could 
not  get  any  space.  It  seems  that  whenever  the  Scandinavian-American 

1  Views  expressed  by  Hon.  William  G.  McAdoo,  Secretary  of  the 
Treasury  at  the  Third  Annual  Meeting  of  the  Chamber  of  Commerce  of 
the  United  States,  February  4,  1915. 


AMERICAN   MERCHANT   MARINE  119 

Lines  are  asking  higher  freight  rates,  other  lines  do  so,  too,  and  now  even 
the  Holland-American  line  is  asking  too  shillings  for  2240  pounds,  while 
only  a  few  days  ago  this  company  asked  45  shillings  for  2240  pounds. 
These  advances  in  freight  rates  are  made  without  notice,  and  even  previous 
engagements  have  not  been  protected.  So  that  the  shippers,  instead  of 
making  a  small  profit  on  their  sales  to  European  countries,  are  losing 
money. 

And  yet  I  have  heard  it  seriously  contended,  although  I  know 
I  need  not  discuss  such  a  proposition  with  intelligent  American 
business  men,  that  freight  rates,  ocean  transportation  rates,  do 
not  make  any  difference  to  our  business  men,  because  the  man 
on  the  other  side  pays  it.  There  is  not  a  man  within  the  sound 
of  my  voice  who  has  anything  to  do  with  business  who  does 
not  know  that  the  cost  of  transportation  is  an  elemental  and 
serious  factor  in  every  business  transaction,  involving  the  ship- 
ment or  movement  of  goods. 

William  Haas  &  Sons,  manufacturers  and  exporters  of  "D" 
shovel  handles,  Houston  Heights,  Tex.,  December  28,  1914: 

For  years  our  entire  output  has  been  disposed  of  abroad,  but  owing 
to  the  present  prohibitive  tariffs  in  ocean  transportation  we  are  unable 
to  deliver  our  goods,  consequently  our  plant  will  remain  closed  down 
until  such  rates  are  established  as  will  enable  us  to  market  our  goods. 
...  In  our  judgment  a  government  merchant  marine  will  solve  the 
problem. 

Charles  E.  Moore,  President,  Leaf  Tobacco  Association,  Bal- 
timore, Md.,  December  28,  1914: 

...  I  desire  to  file  with  your  department  an  urgent  protest  against 
the  unwarranted  advance  in  freight  rates  on  tobacco  as  recently  established 
by  the  Holland-American  Line.  Some  of  our  exporting  members  shipping 
to  Holland  points  have  signed  contracts  with  this  company,  expiring  De- 
cember 31,  1914,  for  a  rate  of  $3.50  per  hogshead  of  tobacco.  This  con- 
tract has  been  disregarded  entirely  and  the  rate  increased  first  to  $5.25, 
then  to  $6.85,  and  to-day  a  notice  that  it  will  be  $7,50  until  further  notice. 
This,  I  repeat,  in  the  face  of  the  written  contract  for  $3.50  per  hogshead. 

Gano,  Moore  &  Co.,  coal,  coke,  iron,  steel  ores,  Philadelphia, 
Pa.,  December  28,  1914: 

The  shortage  of  vessels  is  so  serious  now  that  it  is  practically  stop- 
ping the  exportation  of  coal.  We  have  several  orders  for  coal,  principally 
to  South  American  ports,  and  it  is  impossible  to  secure  vessels. 

American  Tripoli  Company,  "Tripoli"  flour,  Seneca,  Mo., 
December  28,  1914: 

We  have  an  offer  of  some  orders  from  Barcelona,  Spain,  and  the  first 
two  of  the  attached  letters  refer  to  our  effort  to  get  quoted  us  a  rate 


120  SELECTED   ARTICLES 

from  New  Orleans  to  Barcelona;  and  you  will  see  that  the  steamship 
company  operating  steamers  to  Barcelona  refuse  to  quote  rates  at  all. 
In  the  first  letter  the  reason  given  was  that  other  commodities  which 
permit  of  a  higher  rate  are  being  carried,  so  that  our  material,  which 
must  have  a  lower  rate,  is  not  at  all  desirable,  and  they  even  refuse  to 
quote  rates  at  all.  .  .  .  The  fourth  letter,  dated  December  18,  quotes 
us  a  rate  of  49  cents  per  100  pounds  from  New  Orleans  to  Havre,  France, 
and  for  comparison,  will  say  that  just  previous  to  the  European  war,  on 
July  3,  1914,  we  made  a  shipment  at  the  rate  of  18  cents  per  100  pounds, 
a  little  more  than  one-third  of  the  rate  now  asked.  This  high  rate  is,  of 
course,  prohibitive  on  a  commodity  such  as  ours. 

Inman,  Akers  &  Inman,  Atlanta,  Ga.,  December  28,  1914: 

We  are  paying  ocean  freight  from  Savannah  to  Rotterdam  and  to 
Bremen  of  $2,  $2.25,  to  $3  per  hundredweight.  Formerly  the  rates  to 
these  places  were  about  35  cents  per  hundredweight  on  cotton. 

W.  B.  Cooper  &  Co.,  cotton  merchants,  Wilmington,  N.  C, 
December  31,  1914: 

Please  allow  us  to  indorse  the  action  of  the  administration  in  trying 
to  secure  boats  for  the  movement  of  American  products.  We  are  frank 
to  say  that  as  a  general  proposition  we  are  not  anxious  to  see  the  United 
States  government  get  into  too  many  lines  of  business,  but  when  3  cents 
per  pound  or  more  is  to  be  paid  freight  on  cotton  across  the  water  against 
35  cents  per  hundred  pounds  six  months  ago  it  is  time  something  should 
be  done,  in  our  opinion.  (Three  cents  per  pound  equals  $15  per  bale; 
35  cents  per  hundredweight  equals  $1.75  per  bale. 

T.  F.  Jenings,  hardwood  manufacturer,  Marianna,  Fla.,  De- 
cember 28,  1914: 

I  am  exporting  hickory  lumber  in  bundles  to  Christiania,  Norway,  and 
freight  rates  have  become  so  exorbitant  that  it  is  almost  out  of  the 
question  to  ship.  .  .  .  Now,  I  am  compelled,  under  the  circumstances,  to 
shut  down  my  business  if  this  cannot  be  rectified. 

Punch,  Edye  &  Co.,  steamship  agents  and  ship  brokers,  in  a 
letter  to  T.  F.  Jenings,  Marianna,  Fla.,  December  14,  1914, 
state : 

We  have  no  room  to  offer  prior  to  the  steamship  "United  States," 
March  n. 

Chattanooga  Wheelbarrow  Company,  Chattanooga,  Tenn., 
December  26,  1914: 

We  have  been  endeavoring  for  about  a  month  to  get  a  shipment 
through  some  of  the  Atlantic  or  Gulf  ports  for  shipment  to  Bristol  or 
Liverpool.  .  .  .  We  are  still  holding  this  carload  trying  to  get  booking 
through  some  of  the  various  steamship  companies,  and  in  this  connection 
would  state  we  have  three  more  cars  which  we  want  to  get  out  early  in  the 
year,  provided  we  can  get  them  handled  from  port. 


AMERICAN   MERCHANT   MARINE  121 

Brown  &  Adams,  wool  commission  merchants,  Boston,  Mass., 
December  30,  1914: 

We  have  been  unable  to  make  shipments  wool  from  Buenos  Aires  to 
Boston  or  New  York  since  December  15.  Very  little  chance  securing 
freight  room  for  next  thirty  days  account  scarcity  of  vessels.  Have  over 
$600,000  worth  waiting  shipment  already  paid  for.  Freight  rates  when 
available  about  150  per  cent  increase  over  last  year. 

Ike  Manheimer,  green  and  dried  apples,  Rochester,  N.  Y., 
December  28,  1914: 

In  connection  with  the  Scandinavian-American  Line  out  of  New  York 
(Messrs.  Punch,  Edye  &  Co.,  agents)  I  have  had  so  much  trouble  in 
securing  space  to  Copenhagen  and  in  getting  the  goods  on  board  steamer, 
even  after  the  space  had  been  promised,  that  I  was  compelled  to  stop 
selling  goods  to  Copenhagen.  .  .  .  The  freight  on  fresh  apples  in  barrels 
is  almost  equal  to  the  value  of  the  apples,  and  practically  prohibitive. 

G.  Stallings  &  Co.,  Lynchburg,  Va.,  tobacco  exporters,  De- 
cember 28,  1914 : 

There  is  a  considerable  scarcity  of  steamers  flying  the  American  or 
neutral  flags,  and  unless  more  ships  can  be  put  at  the  disposal  of  ship- 
pers, causing  a  general  reduction  of  ocean  freight  rates,  which  are  now 
unreasonable,  excessive,  and  almost  prohibitive,  the  export  business  of 
this  country  is  bound  to  suffer  greatly. 

M.  B.  Nelson,  general  sales  manager  the  Long-Bell  Lumber 
Company,  Kansas  City,  Mo.,  December  29,  1914 : 

I  enclose  a  quotation  from  ship  brokers  issued  under  date  of  De- 
cember 26,  showing  rates  have  advanced  more  than  300  per  cent.  .  .  . 
We  now  have  in  pile  at  port  a  little  over  9,000,000  feet  of  lumber,  or  an 
approximate  value  of  $280,000,  all  of  which  is  deteriorating  and  could  be 
disposed  of  if  shipping  facilities  would  permit. 

There  are  many  others  in  the  same  condition  as  ourselves,  and  we 
sincerely  hope  you  can  do  something  to  relieve  the  situation. 

Panama  Railroad  Company,  January  15,  1915 : 

Our  stock  (of  coal)  has  been  reduced  from  90,000  to  40,000  tons,  and 
both  the  Earn  Line  and  our  company  are  scouring  the  charter  market 
in  the  effort  to  secure  sufficient  tonnage  to  carry  to  the  Isthmus  the 
amount  of  coal  it  is  imperative  we  should  keep  there." 

Gentlemen,  there  are  something  like  seventy-five  letters  of 
a  similar  character  in  this  pamphlet.  I  do  not  want  to  take  your 
time  to  read  them.  I  wish,  indeed,  that  a  copy  of  this  docu- 
ment might  be  put  in  the  hands  of  every  delegate  here,  and,  if 
it  would  not  be  violating  the  rules  of  the  Chamber,  I  should 
like  very  much  to  have  permission  to  send,  for  distribution 


122  SELECTED   ARTICLES 

among  the  members  of  this  convention,  copies  of  this  report, 
which  has  been  printed  and  issued  as  a  public  document  by  the 
Senate.  It  is  entitled  Senate  Document  673,  Fart  2,  Increased 
Ocean  Transportation  Rates. 

Exorbitant  Ocean  Freight  Rates 

Now,  as  to  the  effect  of  these  rates.  I  should  like  to  sum- 
marize them  very  briefly  from  this  report. 

From  the  foregoing  tables  it  will  be  observed  that  ocean 
freight  rates  on  grain  from  New  York  to  Rotterdam  have  been 
increased  since  the  outbreak  of  the  war  900  per  cent;  on  flour 
500  per  cent;  on  cotton  700  per  cent. 

From  New  York  to  Liverpool  the  rates  on  the  same  commodi- 
ties have  increased  from  300  to  500  per  cent. 

From  Baltimore  to  European  ports  (excepting  Germany)  rates 
have  been  increased  on  grain  900  per  cent ;  on  flour  364  per  cent ; 
on  cotton  614  per  cent. 

From  Norfolk  to  Liverpool  rates  on  grain  have  been  in- 
creased from  157  to  200  per  cent;  on  cotton  186  per  cent. 

From  Norfolk  to  Rotterdam  the  rates  on  cotton  have  been 
increased  471  per  cent;  to  Bremen  the  rates  have  increased  on 
cotton  1,100  per  cent,  namely  from  $1.25  per  bale  to  $15  per  bale. 

From  Savannah  to  Liverpool  the  rates  have  been  increased 
on  cotton  250  per  cent;  to  Bremen  the  rates  have  been  increased 
on  cotton  900  per  cent. 

From  Galveston  to  Liverpool  the  rates  have  been  increased 
on  grain  174  per  cent;  on  cotton  361  per  cent;  to  Bremen  the 
rates  have  been  increased  on  cotton  1,061  to  1,150  per  cent. 

Since  this  report  was  written,  gentlemen,  freight  rates  have 
in  many  instances  been  still  further  increased.  Now,  it  is  stated 
that  marine  insurance  and  war  risk  insurance  have  added  very 
greatly  to  these  costs.  Let  me  say  to  you  that  the  marine  in- 
surance rates  have  been  increased  one-eighth  of  I  per  cent  only 
since  the  war  broke  out,  while  war  risk  insurance  rates  have 
been  very  much  reduced.  The  war  risk  insurance  rate  to  Liver- 
pool is  only  2  per  cent  and  to  Bremen  it  is  only  3  per  cent, 
made  so  by  the  government  of  the  United  States,  and  if  the 
government  of  the  United  States  was  not  today  in  this  privatest 
kind  of  private  war  risk  insurance  business,  gentlemen,  the  rates 
of  war  risk  insurance  would  be  prohibitive  and  they  might  be 
stopping  American  ships  altogether ;  and  yet  in  the  face  of  these 


AMERICAN   MERCHANT   MARINE  123 

uncontroverted  facts  and  with  the  situation  growing  more  acute 
every  day  we  stand  here  and  talk,  and  talk,  and  talk  while 
American  interests  are  being  put  daily  into  greater  jeopardy, 
because  some  people  prefer  to  be  bound  by  a  hoary  dogma  than 
to  have  the  government  protect  its  own  citizens  and  the  business 
men  and  producers  of  this  country  by  doing  for  them  what 
private  capital  refuses  to  do. 

Business   Men  Advise   Government   to   Enter  Private  Business 
of  War  Risk  Insurance 

The  historic  position  that  this  country  has  taken  ever  since 
its  existence  is  in  favor  of  the  right  to  do  the  very  things  that 
we  are  attempting  in  this  shipping  bill.  But  if  anybody  is  sen- 
sitive about  the  exercise  of  that  right,  let  me  call  his  attention 
to  one  or  two  things  that  have  been  done.  Shortly  after  the 
war  began,  recognizing  the  serious  and  grave  situation  that 
confronted  this  country,  because  of  the  paralysis  of  shipping 
and  the  complete  disorganization  of  international  credits,  the 
Secretary  of  the  Treasury  on  the  7th  day  of  August,  three  days 
after  the  first  serious  effects  of  the  involvement  of  all  of  these 
nations  in  war  had  become  apparent,  issued  a  call  to  the  country 
asking  for  the  cooperation  of  the  responsible  bankers  and 
business  men  and  shipping  men  in  an  effort  to  accomplish  two 
things;  first,  to  restore  our  shipping  so  that  grain  which  was 
piled  up  in  every  port  on  the  Atlantic  and  Gulf  seaboards  could 
be  moved,  and  second,  to  reestablish  foreign  exchange  upon  a 
normal  basis.  In  response  to  that  call,  gentlemen  came  to  the 
Treasury  Department  representing  in  the  highest  degree  the 
business  interests  of  this  country.  I  wish  I  had  time  to  read  all 
their  names  to  you,  but  I  am  obliged  to  read  just  a  few.  Among 
them  were  Mr.  J.  A.  Farrell,  of  New  York,  and  Mr.  P..  A.  S. 
Franklin,  of  New  York.  Mr.  Farrell  is  the  president  of  the 
United  States  Steel  Corporation.  Mr.  Franklin  is  the  vice- 
president  of  the  International  Mercantile  Marine  Company. 
Mr.  Bernard  Baker,  of  Baltimore,  well  known  in  the  shipping 
world,  a  gentleman  who  has  no  interests  of  any  kind  in  the 
shipping  business,  and  who  is  interested  in  this  great  question 
purely  as  an  American  citizen,  and  who  knows  the  vitality  of  the 
question  and  the  necessity  of  acting  promptly  upon  it,  was  also 
present;  as  were  also  Mr.  Robert  Dollar  of  San  Francisco,  Mr 
Hemphill  of  New  York ;  and  many  other  prominent  men,  includ- 


124  SELECTED   ARTICLES 

ing  President  Fahey  of  Boston,  who  is  now  the  President  of  this 
Chamber  of  Commerce  of  the  United  States. 

Now,  gentlemen,  that  conference  passed  several  resolutions. 
I  am  going  to  read  you  two  that  have  a  bearing  on  this  question : 

Resolved,  that  this  conference  urge  the  United  States  government  to 
establish  a  bureau  of  war  risk  insurance  to  be  administered  under  the 
direction  of  a  suitable  government  department  by  a  board  of  three  or 
five  members  which  shall  assume  the  risks  of  war  on  American  vessels 
and  American  cargoes  shipped  or  to  be  shipped  therein  whenever,  in  the 
judgment  of  the  board,  it  shall  appear  that  American  vessels  or  shippers 
in  American  vessels  are  unable  in  any  particular  trade  to  compete  on 
equal  terms  with  the  vessels  or  shippers  of  other  nationalities  by  reason 
of  the  protection  offered  such  other  carriers  or  shippers  by  arrangements 
for  indemnity  through  their  governments;  and  that  such  board  have  power 
to  fix  rates  of  premium. 

That  resulted  in  the  enactment  of  the  war  risk  insurance 
measure  to  which  I  have  already  referred. 

Resolved,  that  the  present  opportunity  to  extend  American  foreign 
trade  and  the  opportunity  now  to  begin  the  creation  of  a  mercantile 
marine  under  the  United  States  flag  is  so  great  that  this  conference 
appeals  to  Congress  by  immediate  and  effective  legislation  and  by  necessary 
changes  in  our  navigation  laws  to  make  it  possible  for  our  citizens,  with- 
out discrimination,  to  buy  and  operate  ships  under  American  registry  in 
foreign  trade  on  equal  competitive  terms  with  all  other  maritime  nations. 

Those  were  significant  declarations  by  men  prominent  in  the 
business  and  banking  world,  most  of  them  not  democrats  in  poli- 
tics— men  willing  to  put  aside  partisan  considerations  and  come 
here  to  Washington  and  ask  this  government  to  go  first  into 
private  business  for  the  purpose  of  protecting  the  shippers  of 
this  country  because  war  risk  insurance  in  times  like  these  is  just 
as  essential  a  part  of  the  shipping  business  as  the  steel  plates  in 
the  hull  of  the  vessel,  and  no  vessel  will  go  to  sea  without  war 
risk  insurance  any  more  than  it  would  go  to  sea  without  a  crew. 
And  here  they  ask  this  government  to  go  into  private  business 
to  protect  the  American  business  man.  When  that  matter  came 
before  Congress  it  was  voted  for  by  Democrats  and  Republicans 
alike.  It  was  passed  by  a  yea  and  nay  vote  in  the  Senate,  and 
the  distinguished  Senator  from  Ohio  is  one  of  the  men  who 
voted  for  it,  or,  at  least,  he  is  not  recorded  against  it.  There 
was  opposition  in  the  House  led  by  Mr.  Mann,  the  Republican 
leader,  but  the  measure  was  overwhelmingly  passed  and  a  day 
or  two  after  that  the  War  Risk  Bureau  was  started.  It  was 
made  a  bureau  of  the  Treasury  Department  and  is  actually  doing 
business  in  insuring  American  ships. 


AMERICAN   MERCHANT   MARINE  125 

Successful  Operation  of  Government  War  Risk  Insurance  Bureau 

Now,  they  say  that  the  government  cannot  conduct  any  busi- 
ness without  a  loss  of  efficiency,  and  without  extremely  great  ex- 
pense. Let  me  call  your  attention,  gentlemen,  to  what  has  hap- 
pened in  the  war  risk  business.  Now  this  is  mighty  private  busi- 
ness. It  collides  with  other  people  who  are  in  the  war  risk 
insurance  business.  But  it  was  justified.  It  was  the  right  thing 
to  do.  They  may  say,  "Well,  that  was  only  a  temporary  measure, 
because  it  has  to  expire  with  the  war."  Of  course  it  has  to  ex- 
pire with  the  war.  What  is  war  risk  insurance  for  except  for  use 
while  the  war  is  in  progress,  but  the  principle  is  the  same. 

We  have  issued  up  to  February  2,  1915 — the  Bureau  went  into 
operation  on  September  2 — nearly  $48,000  of  insurance  upon 
American  ships  and  cargoes,  and  we  have  kept  the  rates  down. 
The  premiums  we  have  received  to  date  in  actual  money  paid  into 
the  Treasury  of  the  United  States  amount  to  $1,250,000.  Earned 
premiums  to  date  on  expired  risks  are  $397,897,  and  we  have  not 
made  a  loss  yet. 

Now,  gentlemen,  suppose  we  had  said,  "Oh,  well,  we  will 
reject  this;  we  can't  afford  to  have  the  government  engaged  in 
private  business,"  just  as  they  are  saying  about  the  shipping  bill : 
"You  are  bound  to  run  this  thing  at  a  loss.  You  will  involve 
the  American  people  in  a  loss."  Suppose  we  had  done  that. 
Where  would  we  be  today?  I  hesitate  to  tell  you  what  would 
have  happened  to  the  commerce  of  America  if  this  had  not  been 
done.  What  do  you  suppose  it  has  cost  us  to  run  the  bureau  up 
to  this  time?  Mind  you,  we  have  taken  in  $397,897.  You  would 
think  $50,000  very  reasonable  for  handling  the  bureau  during 
that  time,  wouldn't  you?  It  has  cost  us  exactly  $6,449.68  to  do 
the  business. 

Did  we  put  any  conditions  in  the  war  risk  insurance  bill  that 
we  must  not  issue  an  insurance  policy  on  an  American  vessel 
unless  we  had  the  consent  of  some  other  power?  Not  a  bit  of  it. 
It  is  our  business.  We  have  a  right  to  do  this  thing.  But  they 
say,  "If  you  are  going  into  the  ship  business,  you  will  get  us 
into  trouble." 

My  friends,  when  the  government  of  the  United  States  in- 
sures the  cargo  and  the  hull  of  a  vessel,  a  policy  is  issued  under 
the  seal  of  this  government,  and  signed  by  its  responible  execu- 
tive officer,  insuring  that  cargo,  and  when  a  vessel  and  cargo  are 
seized  and  taken  into  a  prize  court,  this  government  has  a  direct 


126  SELECTED  ARTICLES 

interest  in  the  issue.  We  insure  as  much  as  a  million  dollars 
upon  any  one  hull  and  cargo.  Suppose  a  vessel  is  seized,  as  I 
said  before.  A  million  dollars  is  the  equivalent  of  four  good 
tramp  steamships.  You  could  buy  four  good  tramp  steamers 
for  a  million  dollars.  So  we  have,  analogously,  four  ships 
under  this  flag  belonging  to  this  government  in  a  prize  court  in 
a  foreign  country.  Are  we  afraid  of  it?  Certainly  not.  When 
the  government  goes  into  the  war  risk  insurance  business  it  goes 
in  as  any  citizen  would  go  in.  It  divests  itself,  to  a  certain  extent, 
of  its  sovereignty,  because  it  is  engaging  in  private  business; 
and  that  is  one  of  the  most  extreme  cases  I  could  cite  where  a 
government  has  directly  gone  into  a  business  which  might  involve 
it  in  such  complications  as  these  gentlemen  fear.  But  it  has  no 
elements  of  danger,  because  we  expect  those  cases  to  be  deter- 
mined in  the  same  way  as  if  they  affected  any  citizen  of  the 
world,  by  the  decision  of  a  just  prize  court,  and  we  cannot  com- 
plain as  long  as  we  get  justice — and  that,  of  course,  we  will  get. 

Ship  Registry  Bill 

We  passed  a  ship  registry  bill.  There  is  a  lot  of  cry  about 
free  ships.  They  say,  "Just  give  us  free  ships;  that  is  the  rem- 
edy." Do  you  know  that  you  have  had  free  ships  since  1912? 
What  effect  has  the  ship  registry  bill  had  on  our  commerce? 
Nothing;  literally  nothing. 

Do  you  know  that  under  the  Panama  Canal  Act  you  get  "free 
ships,"  and  that  everything  that  enters  into  the  furnishing  of  a 
ship  is  "free"?  And  yet  American  capital  has  not  come  forward 
to  do  anything.  "Do  you  know  why?  The  Chamber  of  Com- 
merce of  New  York  made  a  report  by  their  experts — I  know 
they  are  experts,  because  they  say  so  over  their  own  signatures. 
They  made  a  report  in  which  they  said  it  cost  from  5  to  10  per 
cent  more  only,  not  40  or  50  per  cent,  as  is  commonly  understood 
and  alleged  as  a  reason  for  giving  a  subsidy  to  American  ships. 
They  said  it  cost  from  5  to  10  per  cent  more  only  to  operate  an 
American  ship  as  against  a  foreign  ship.  You  can  buy  them  free 
in  the  markets  of  the  world  today,  and  operate  them  in  our  com- 
merce, except  in  our  coastwise  trade.  You  can  buy  a  ship  any- 
where and  do  it. 

When  this  war  broke  out  a  number  of  American  citizens  had 
ships,  which  they  were  operating  under  the  British  or  some  other 
flag— mostly  under  the  British  flag.  They  were  anxious  to  have 


AMERICAN   MERCHANT   MARINE  127 

the  law  changed  to  such  an  extent  that  those  ships  could  be  trans- 
ferred or  that  they  could  buy  ships  and  transfer  them  to  Ameri- 
can registry,  and  they  asked  us  to  support  such  a  measure.  We  did 
support  it,  and  the  distinguished  Senator  from  Ohio,  if  I  am  not 
mistaken,  voted  for  it,  and  Senator  Root  voted  for  it  and  nearly 
every  Republican  in  Congress  voted  for  that  measure  which  went 
promptly  upon  the  statute  books.  These  American  shipowners 
did  not  want  to  transfer  their  ships  from  a  belligerent  flag  to  the 
American  flag  because  they  loved  our  flag;  they  transferred 
them  because  it  saved  them  from  possible  capture  by  hostile 
cruisers.  It  may  cost  them  a  little  more  to  operate  them  under 
the  American  flag,  but  they  pay  this  for  safety — for  insurance. 

When  we  passed  that  law  we  put  it  in  the  hands  of  any  Ameri- 
can citizen  to  buy  a  ship  of  any  belligerent  flag  and  transfer  it 
to  American  registry.  We  have  given  any  citizen  the  power — a 
power  that  our  opponents  now  hesitate  to  give  to  the  President  of 
the  United  States,  who  has  no  a  motive  on  earth  except  to  serve 
you  and  to  keep  this  country  out  of  trouble — we  have  given  to  any 
citizen  a  power  that  these  gentlemen  are  unwilling  to  accord  to 
the  President  of  the  United  States  under  this  shipping  bill. 

You  know  that  individuals,  for  self  interest  or  for  some  other 
reason,  may  collusively  or  in  bad  faith  transfer  a  ship.  They 
may  transfer  it  to  our  registry  for  some  purpose  that  is  not 
square,  that  is  not  fair,  and  if  they  did,  the  American  government 
has  got  to  come  to  the  front  and  make  diplomatic  representations 
in  order  to  protect  the  man  who  does  that  because  his  ship,  which 
we  permitted  to  come  under  American  registry,  flies  our  flag.  We 
have  got  to  make  representations.  So  far  as  that  transfer  is 
bona  fide,  it  is  recognized  in  international  law  as  being  a  proper 
transfer.  The  burden  of  proof  rests  upon  the  man  who  effectu- 
ates that  transfer  to  show  in  a  prize  court  that  it  was  bona  fide. 
But  the  government  of  the  United  States  would  have  to  intervene 
through  diplomatic  channels  in  each  of  such  cases  and  see  that  its 
citizens  and  the  ships  under  its  flag,  got  justice  in  that  prize 
court. 


128  SELECTED   ARTICLES 


ADEQUATE  SHIPPING  FACILITIES  FOR  FOR- 
EIGN COMMERCE1 

Object  to  Be  Attained 

This  bill  purposes  to  initiate  an  American  ocean-going  marine, 
an  object  desired  by  all  Americans.  The  annual  toll  paid  by  the 
United  States  to  vessels  flying  foreign  flags  is  variously  stated 
at  from  $200,000,000  to  $300,000,000.  This  seriously  affects  ad- 
versely the  balance  of  international  trade,  and  by  itself  is  a 
matter  calling  for  legislation  to  work  a  change. 

Not  only  is  this  so,  but  recent  events  have  made  clear  to  the 
entire  country  certain  facts  which  it  is  the  purpose  of  this  legis- 
lation to  alter.  Our  great  and  growing  foreign  commerce,  aggre- 
gating over  four  thousand  two  hundred  and  fifty  millions  yearly, 
of  which  our  exports  form  much  the  larger  part,  depends  for  its 
ocean  transportation  chiefly  upon  the  merchant  marine  of  the 
nations  which  are  our  own  commercial  competitors  in  the  mar- 
kets to  which  we  all  sell.  By  reason  of  this  control  by  others  of 
our  needed  transit  facilities,  we  are  subject  alike  to  their  primary 
interests  and  to  their  risks.  If,  for  example,  their  primary  in- 
terest calls  for  them  to  withdraw  ships  for  purposes  of  war,  the 
ships  are  withdrawn,  and  with  them  go  the  facilities  we  need, 
and  we  are  without  recourse.  If  the  exigencies  of  war  call  for 
destruction  by  the  enemy  of  one  of  the  powers  whose  ships  we 
use,  that  destruction  takes  place.  With  the  destroyed  ships 
American  cargoes  go  to  the  bottom.  Our  commerce  is  immedi- 
ately affected,  but  we  again  are  helpless.  If  the  exigencies  of 
war  call  for  the  interning  in  foreign  ports  of  merchant  vessels 
carrying  American  cargoes  under  the  flag  of  a  belligerent,  the 
ships  are  interned,  and  the  cargoes  they  carry,  though  belonging 
to  Americans,  and  as  a  matter  of  fact  though  paid  for  by  Ameri- 
cans, cannot  be  secured,  because  the  American  interest  in  the 
cargo  is  necessarily  subordinated  to  the  belligerent  interest  in  the 
vessel  itself.  All  these  conditions  have  actually  existed  in  recent 
months,  and  some  of  them  exist  to-day. 

Furthermore,  it  is  the  fact  that  the  primary  interest  in  the 
transportation  of  our  ocean-borne  commerce  is  that  of  the  Euro- 
pean stockholders  in  the  companies  which  do  the  transporting. 
Those  stockholders  look  to  their  investments  to  return  them  a 

1  6jd  Congress,  36!  Session.     Senate  Report.     No.  841,  p.  4-11. 


AMERICAN   MERCHANT   MARINE  129 

profit.  Therefore  the  business  must  be  done  in  that  way  which 
is  first  of  all  most  profitable  for  the  European  stockholders,  and 
this  may  and  as  a  matter  of  fact  does  work  out  to  the  disadvan- 
tage of  American  commerce.  The  two  opposing  interests  are 
these :  First,  and  most  important  to  us,  the  interests  of  American 
agriculture,  industry,  and  commerce  as  a  whole;  second,  and 
least  important  to  us,  though  now  in  control,  the  interest  of 
European  stockholders  to  have  their  ships  so  operated  as  to  re- 
turn them  the  largest  element  of  profits.  We  have  been  content 
hitherto  to  subserve  the  interests  of  the  European  stockholders, 
and  to  a  minor  extent  of  American  stockholders  in  ships  under 
foreign  flags;  but  the  shock  of  war  has  disclosed  the  fact  that 
this  arrangement,  while  seeming  to  work  well  in  ordinary  times, 
has  in  it  the  elements  -of  weakness  outlined  above,  and  which 
are  now  plain  to  all. 

In  addition  to  this  and  in  part  because  of  the  operation  of 
the  causes  above  suggested,  there  is  at  present  a  lack  of  vessels, 
even  of  those  flying  foreign  flags,  and  a  far  greater  lack  of  ves- 
sels under  our  own  flag.  This  has  resulted  in  a  grievous  ad- 
vance of  freight  rates  to  almost  all  portions  of  the  globe.  The 
least  advance  which  has  come  to  the  knowledge  of  your  com- 
mittee is  10  per  cent  on  Asian  business,  but  on  certain  goods, 
such  as  steel  and  iron,  rates  have  advanced  more  than  this.  To 
South  Africa  the  advance  has  been  20  per  cent ;  to  South  Amer- 
ica, 25  per  cent;  and  to  European  ports,  from  50  to  1,000  per 
cent,  depending  upon  the  merchandise  carried  and  the  ports  of 
destination.  The  present  rate  upon  cotton  from  Galveston  to 
Bremen  is  ten  times  that  which  prevailed  a  year  or  more  ago, 
this  in  spite  of  the  fact  that  cotton  is  not  contraband  and  that 
the  belligerent  governments  permit  its  free  passage.  As  this  re- 
port is  written,  shipowners,  chiefly  foreigners,  are  reaping  a 
rich  harvest  of  profits  at  the  cost  of  American  producers,  whose 
prices  are  necessarily  diminished  in  proportion  to  the  excessive 
tax  put  upon  their  wares  for  the  benefit  of  the  owners  of  ocean 
transportation  lines.  When  it  costs  $15  a  bale  merely  to  trans- 
port cotton  across  the  ocean,  it  is  evident  that  this  charge  is  a 
heavy  handicap  upon  our  entire  cotton-producing  interest  at  a 
time  when  we  have  the  largest  crop  in  our  history. 

Even  this  serious  burden  imposed  upon  our  people  against 
our  will  and  beyond  our  control  is  not,  however,  the  greatest 
danger  possible.  We  now  see  clearly  that  the  fortunes  of  war 

11 


130  SELECTED   ARTICLES 

or  the  naval  interests  of  a  belligerent  may  at  any  time  stop  our 
transportation  movement  entirely.  It  did  so  for  about  two  weeks 
in  the  month  of  August,  and  circumstances  may  recur  to  cause 
it  to  do  so  again.  At  a  time,  therefore,  when  the  United  States 
abounds  in  crops  of  wheat,  corn,  cotton,  apples,  for  which  a 
profitable  market  exists  abroad,  and  when  the  world,  both  that 
part  of  it  which  is  in  arms  and  that  which  remains  at  peace,  is 
calling  as  never  before  for  the  products  of  our  mines  and  fac- 
tories, we  are  all  but  helpless  in  the  face  of  the  largest  opportun- 
ity we  have  even  known.  The  need  of  others  for  our  goods 
is  our  sole  reliance  for  transportation  facilities.  The  wrath  of 
other  nations  one  with  another  may  at  any  time  cause  these  fa- 
cilities to  be  removed.  Even  at  present  high  rates,  ships  are  not 
available  for  many  purposes  until  March.  The  situation  is  emer- 
gent, expensive,  and  it  is  impossible  with  any  due  regard  to  the 
interests  of  American  commerce  to  permit  it  to  continue  a  day 
longer  than  is  necessary.  The  Associated  Press  says : 

During  the  first  four  months  of  the  war  54  British  foreign-going  ships 
with  cargoes  were  captured  or  destroyed.  Further,  that  losses  to  Scandi- 
navian shipping  have  been,  through  mine  disasters:  Sweden,  8  ships;  Den- 
mark, 6  vessels;  Norway,  5  vessels;  and  Holland,  3  vessels.  There  is 
grave  uncertainty  as  to  maintenance  of  the  present  insufficient  supply  of 
tonnage. 

Proposed  Measures 

Numerous  plans  have  been  suggested  to  build  up  our  mer- 
chant marine,  the  principal  one  being  the  payment  of  direct  sub- 
sidies. The  American  people  have  never  been  willing  to  foster 
private  interest  in  this  way,  nor  is  there  any  sign  that  they  have 
changed  their  minds.  The  adoption  by  us  of  the  plan  of  service 
subsidies  in  the  carrying  of  our  mails  has  not  given  that  in- 
crease to  our  merchant  marine  promised  by  the  advocates  of  that 
policy.  We  are  now  paying  four  vessels  of  the  American  line — 
the  New  York,  the  Philadelphia,  the  St.  Louis,  and  the  St.  Paul— 
in  the  North  Atlantic  trade,  about  $735,ooo  per  annum  for  mail 
transportation.  For  the  conveyance  of  the  United  States  mails  to 
foreign  countries  we  paid  for  the  fiscal  year  ending  June  30,  1914, 
to  American  steamers  $1,409,483.77,  and  to  foreign  steamers  (be- 
cause American  steamers  could  not  be  had)  $1,429,434.25.  The 
government  has  no  control  over  the  passenger  or  freight  rates 
charged  by  these  vessels,  and  it  may  be  properly  assumed  that 
they  charge  all  the  traffic  will  bear.  An  investigation  made  by 
the  Committee  on  the  Merchant  Marine  and  Fisheries  of  the 


AMERICAN   MERCHANT   MARINE  131 

House  of  Representatives  into  steamship  conferences  and  agree- 
ments in  the  domestic  and  foreign  trade  disclosed  the  fact  that  for 
three  or  four  year  prior  to  1913  ocean  freight  rates  increased 
from  50  to  100  per  cent.  Since  July  I,  1913,  the  New  Orleans 
Cotton  Exchange  certifies  that  the  rates  on  cotton  from  New 
Orleans  to  Liverpol  have  advanced  as  follows  per  100  pounds : 

Cents. 

July  i,  1914 28 

August  i,  1914 28  to  33 

August  17,   1914 50 

August  23,    1914 50 

October  28,  1914 60 

November  9,  1914 60 

November  1 1,  1914 65 

December  i,  1914 70 

December  4,  1914 75 

December  n,  1914 85 

Or  more  than  200  per  cent  since  July  i,  1914. 
The  following  memorandum  from  the  Treasury  Department 
shows  the  abnormal  increases  on  other  articles  of  commerce : 


Memorandum  Concerning  Rise  in  Freight  Rates,  New  York  to 
Liverpool 


Grain 
per 
bushel 

1913     Pence. 
Dec.    12. .     2 

1914 

Mar.   12..      i  y2 
Tune   12. .      i Yi 


July    12.. 
July3o1.. 


Sept.     5..  3 

Oct.     12..  4 

Nov.    12..  6y2 

Dec.    12..  8 


Cotton,     Flour     Gen- 
per          per       eral 

100  100  cargo, 

Ibs.  Ibs.  per  ton 

Cents.  Cents.       s.  d. 
30  14         17  6 


Provi- 
sions, 
per  ton 
s.  d. 

20    O 


Freight          Bottoms 


Scarce Ample. 


12 

17  6 

20    0 

Do 

Do. 

IO 

17  6 

20    0 

Increased. 

Being  held 

for  higher 

rates. 

12 

17  6 

20    O 

Do 

Do. 

12 

17  6 

20    0 

Plenty  

Demand  for 

tonnage  in- 

creasing. 

2O 

17  6 

20    0 

Scarce.  .  .  . 

Ample. 

21 

20    O 

30  o 

Increased. 

Demanding 

higher  rates. 

24 

20    O 

30  o 

Do 

Becoming 

limited. 

26 

30    0 

30  o 

Consider- 

Scarce. 

able. 

1  No  rates  quoted  until  Sept.   5. 


132  SELECTED   ARTICLES 

A  comparison  of  the  freight  rates  between  New  York  and  Liverpool 
is  shown  by  the  above  table  and  is  most  interesting  and  instructive. 

Between  December,  1913,  and  the  end  of  July,  1914,  the  rates  for  the 
the  most  part  held  uniform,  there  being,  however,  a  slight  advance  in  the 
grain  rate,  a  slight  decrease  in  the  flour  rate,  and  a  fall  of  50  per  cent 
in  the  rate  for  cotton. 

In  December,  1913,  there  was  more  tonnage  available  than  freight 
offered. 

At  the  end  of  June,  1914,  there  was  plenty  of  freight  offered  for 
shipment,  but  shipowners  were  holding  their  tonnage  in  expectation  of 
higher  rates,  and  this  condition  continued  until  the  war. 

For  several  weeks  following  the  outbreak  of  the  war  shipping  was  de- 
moralized and  transatlantic  freight  traffic  was  practically  at  a  standstill. 

By  the  first  week  in  September  sea  conditions  became  more  settled,  but 
while  there  was  ample  tonnage  offered,  the  difficulty  in  financing  cargoes 
caused  a  very  limited  demand  for  the  ships.  As  a  result  the  freight  rates 
on  standard  cargoes  were  practically  the  same  as  during  the  normal  times 
before  the  outbreak  of  hostilities. 

During  September  the  demand  for  tonnage  steadily  increased,  and  the 
shipowners  naturally  began  to  hold  their  tonnage  for  higher  rates. 

By  the  first  week  in  November,  the  greatly  increased  rates  offered 
by  shippers  were  sufficient  to  bring  out  the  ships,  and  the  idle  tonnage 
was  rapidly  utilized;  by  the  end  of  November  ships  began  to  be  scarce,  and 
at  the  present  time  the  lack  of  tonnage  is  clearly  set  forth  in  the  follow- 
ing quotation  from  the  New  York  Journal  of  Commerce,  of  December  12, 
1014: 

"The  full-cargo  steamer  market  continues  exceedingly  strong,  influenced 
by  a  steady  demand  for  tonnage  and  a  very  limited  supply  of  same  available 
before  the  middle  of  January.  The  bulk  of  the  demand  continues  to  come 
from  the  shippers  of  grain,  cotton,  coal,  and  general  cargo  to  European 
ports,  principally  to  the  Mediterranean,  and  rates  have  advanced  steadily, 
until  at  the  present  they  are  at  their  highest  with  every  indication  of  fur- 
ther advances  being  recorded  within  the  next  few  days." 

This  scarcity  of  ships  has  resulted  in  the  tremendously  increased  freight 
rates,  as  shown  by  the  above  table.  Comparing  the  rates  current  on  De- 
cember 12,  1913  (when  world  conditions  were  normal),  with  rates  at  the 
present  time  (December  12,  1914,  when  available  tonnage  has  been  greatly 
diminished  through  the  effects  of  war),  we  find  the  following  very  marked 
increases  in  the  transatlantic  freight  rates  for  the  staple  articles  of  export; 
Freight  on  provisions,  50  per  cent;  on  general  cargo,  70  per  cent;  on  flour, 
86  per  cent;  on  cotton,  150  per  cent;  on  grain,  300  per  cent. 

Control  of  Ocean  Transportation 

Inasmuch  as  freights  have  been  going  up  abnormally  and 
without  sufficient  economic  cause  during  years  of  almost  univer- 
sal peace,  and  inasmuch  as  they  have  transcended  the  bounds  of 
reason  since  the  beginning  of  the  European  war,  your  committee 
is  of  opinion  that  this  is  a  most  auspicious  time  to  begin  the  aug- 
mentation of  the  American  marine  by  government  action. 

It  is  not  sufficient,  however,  to  draw  attention  to  the  increases 


AMERICAN   MERCHANT   MARINE  133 

in  the  rates  for  ocean  transportation,  however  onerous  those 
rates  may  be  to  the  business  of  our  American  producers,  whether 
industrial  or  agricultural.  There  is  a  far  more  important  element 
to  be  considered,  namely,  the  control  by  us,  and  in  the  interest 
of  America  as  a  whole,  of  our  ocean  transportation.  This  con- 
trol does  not  now  exist.  We  stand  helplessly  at  the  water  front 
and  let  others  do  our  business  for  us  to  their  own  great  gain, 
subject  to  their  own  risks.  They  do  it  in  their  own  way  as  to 
time,  place,  and  character  of  transportation,  and  no  one  will  pre- 
tend that  they  have  extended  to  us  in  all  respects  equal  facilities 
to  those  which  they  have  furnished  to  their  own  peoples.  We 
need  control  of  the  situation  in  several  ways.  Control  should  be 
exerted  over  rates  of  transportation,  in  order  that  conditions  like 
those  existing  today  shall  become  impossible.  If  there  were 
American  ships  of  ample  capacity  to  carry  cotton  from  our 
southern  ports,  or  grain  and  apples  from  our  northern  cities,  and 
if  these  ships  were  so  controlled  that  the  rates  for  transportation 
therein  could  be  made  such  as  were  just  alike  to  the  vessel  and 
to  the  shipper,  a  handicap  would  be  at  once  removed  which  now, 
at  a  critical  point  in  our  financial  history,  is  weighing  us  down. 

In  the  second  place,  control  should  be  exerted  as  to  the  routes 
to  be  followed.  In  the  interest  of  American  commerce  as  a 
whole  it  should  not  be  permitted  that  the  necessity  of  European 
stockholders  for  earnings  should  dictate  where  and  when  ships 
should  go.  That  is  a  matter  we  ought  to  control  for  ourselves 
and  in  which  we  can  not  afford  to  be  controlled  by  others.  It 
should  rest  with  us  to  say  that  such  and  such  a  ship  shall  go  to 
such  and  such  a  place  when  and  as  American  commerce  needs  to 
have  it  go  there.  It  cannot  be  imagined  that  the  American  peo- 
ple, who  desire  their  commerce  to  be  promoted  by  shipping,  shall 
be  content  to  have  that  promotion  remain  a  secondary  thing  in 
the  interests  of  certain  investors,  chiefly  abroad,  but  partly  at 
home. 

Again,  control  should  be  exerted  as  regards  the  character  of 
the  transportation  furnished.  We  need  passenger  facilities  to 
South  and  Central  America  and  to  other  portions  of  the  world 
as  good  as  those  which  Europe  provides  for  her  own  people.  In 
the  past  we  have  been  handicapped  by  the  fact  that  to  reach 
Argentina  and  Brazil  Americans  have  found  it  preferable  to  go 
by  way  of  Europe.  In  short,  it  is  the  duty  of  the  government  in 
all  these  matters,  by  its  control,  to  be  helpful  to  American  com- 
merce and  not  to  be  helpless  in  the  whole  matter. 


134  SELECTED   ARTICLES 

This  legislation,  so  far  as  it  permits  the  control  of  ocean 
freight  rates  by  transportation  in  vessels  under  government  direc- 
tion, is  in  line  with  all  recent  rate  legislation.  It  permits  that  to 
be  done  at  sea  which  we  have  long  done  at  home,  and  provides 
for  the  ocean  carrier  what  we  long  ago  provided  for  the  common 
carrier  on  land.  By  reason,  moreover,  of  the  international  char- 
acter of  ocean  transportation,  control  by  government  direction  of 
vessels  of  the  kind  proposed  by  this  measure  is  the  only  way 
available  for  that  power  over  rates  which  we  have  long  exer- 
cised on  shore,  and  which  present  circumstances  show  us  is  badly 
needed  at  sea. 

Scarcity  of  Ships 

The  following  communication  from  the  Department  of  Com- 
merce shows  the  great  decrease  of  ships  and  tonnage  from 
United  States  ports : 

N£t  tonnage  of  vessels  cleared  from  the  United  States  for  foreign 
ports  during  the  five  months  ended  Nov.  30,  1913  and  1914. 

1913 1914 

Month.         American.  Foreign       Total.     American.  Foreign.         Total 

July 1,873,857  3,836,127  5,709,984   1,558,249  4,062,802  5,621,051 

August 1,749,384  3,762,141  5,S",525   1,634,974  2,971,270  4,606,244 

September i»57i,473  3,688,980  5,260,453   1,366,790  3,055,424  4,422,214 

October    1,749,735  3,538,895  5,288,630   1,320,718  2,584,068  3,904,786 

November 1,498,253  2,896,501  4,394,754      956,264  2,404,695  3,360,959 

An  Emergency  Exists 

These  facts  clearly  indicate  that  an  emergency  exists — there 
is  a  lack  of  ships — and  that  our  people  are  being  deprived  of  the 
means  of  transportation  for  shipments  of  many  classes  of  their 
goods,  and  are  being  mulcted  by  excessive  and  unreasonable  rates 
upon  shipments  actually  made. 

Private  enterprise  with  an  unquestioned  occupancy  of  the 
field  has  broken  down  at  a  crucial  point  and  has  failed  to  give 
us  ships  to  meet  the  demands  of  our  shippers.  The  Chamber  of 
Commerce  of  Pensacola,  Fla.,  of  date  December  12,  1914,  sent 
the  following  letter  to  the  committee : 

PENSACOLA,  FLA.,  December  12,  1914. 
Senator  D.  U.  FLETCHER, 

Senate  Office  Building,   Washington,  D.  C. 

DEAR  SENATOR:  We  here  do  not  know  whether  to  be  amused  or  dis- 
gusted in  regard  to  interviews  given  out  by  prominent  gentlemen,  who 
should  know  better,  as  to  the  great  number  of  ships  available  for  carrying 
freight  and  the  ease  in  obtaining  them. 


AMERICAN   MERCHANT   MARINE  135 

If  some  of  the  gentlemen  who  talk  this  way  would  come  down  to  this 
coast  and  see  how  our  business  is  hampered  by  inability  to  get  bottoms  and 
the  extraordinary  freight  rates  charged,  they  might  change  their  minds 
as  to  the  abundance  of  vessels  available.  The  fact  is  that  freights  are  al- 
most at  a  prohibitive  figure,  and  vessels  can  hardly  be  obtained  even  at  the 
piratical  prices  asked. 

Congress  will  be   doing   a   great    service  for   this  coast  if  they  can  find 
some    effective    means    of    remedying  this    serious   situation. 
Very  truly,  yours, 

C.  E.  DOBSON,  President. 

This  letter  is  in  agreement  with  the  statements  from  two  de- 
partments of  the  government — the  Treasury  and  Commerce — 
and  accords  with  our  conclusions  that  an  emergency  exists. 

Need  of  a  Merchant  Marine 

We  have  already  stated  that  it  is  our  belief  that  there  is  no 
division  of  sentiment  among  our  people  upon  this  question.  We 
not  only  need  an  enlarged  merchant  marine  to  meet  the  present 
emergency,  but  legislation  which  will  give  us  an  enlarged 
American  merchant  marine,  with  ships  flying  the  American  flag, 
traveling  on  sea  lines  regularly,  with  scheduled  dates  of  sailing 
and  well-advertised  points  of  destination.  Private  enterprise  has 
failed  to  fully  give  our  people  these  advantages  under  their  own 
control,  and  by  that  failure  has  seriously  interfered  with  the  full 
development  of  our  foreign  trade.  It  now  remains  for  the  gov- 
ernment, by  wise  legislation,  to  initiate  a  greater  American  mer- 
chant marine. 

It  is  not  desired  to  create  a  government  monopoly  in  the 
shipping  business.  It  is  not  necessarily  involved  in  the  proposed 
legislation  that  the  government  shall  permanently  remain  inter- 
ested in  shipping.  Wherever  private  interests  will,  at  reasonable 
rates  and  with  proper  facilities,  serve  American  commerce  in 
ocean  transportation,  the  government  will  be  more  than  content 
to  have  them  do  so.  By  the  proposed  plan  the  government  will 
not  enter  the  field  of  ocean  transportation  as  a  cutthroat  com- 
petitor. Its  purpose  is  to  aid  and  not  to  injure  American  com- 
merce, and  it  must,  of  course,  be  recognized  that  privately  owned 
American  vessels  in  ocean  transportation  are  a  part  of  American 
commerce,  and  are  not  therefore  to  be  hindered,  but  rather  are 
to  be  helped.  The  very  steadiness  of  control  that  will  be  intro- 
duced into  the  situation  through  the  proposed  measure  will  itself 
be  an  element  of  aid  to  the  privately  owned  transportation  lines. 
We  shall  be  content  to  have  a  large  portion  of  our  foreign 
commerce  carried  under  the  American  flag  in  privately  owned 


136  SELECTED   ARTICLES 

vessels.  But  we  cannot  rest  content  while  over  90  per  cent  of  our 
foreign  commerce  is  carried  under  foreign  flags,  subject  to  the 
primary  interests  which  naturally  arise  under  those  flags,  out  of 
our  own  control  in  every  respect,  and  with  no  limitation  on 
charges  save  the  exactions  for  profit  of  stockholders  to  whom 
American  commerce  is  but  incidental  to  their  own  stronger  inter- 
ests. 

Will  Help  Our  Shipyards 

The  bill  will  create  work  for  our  shipyards  not  only  in  the 
construction  of  ships  but  in  the  matter  of  repairs.  Our  ship- 
yards for  the  construction  of  our  war  vessels  successfully  outbid 
the  world  for  the  construction  of  war  vessels  for  Argentina,  and 
it  is  believed  that  they  can  carry  this  successful  competition  into 
the  construction  of  merchant  vessels.  Besides  this  the  bill  will 
create  a  demand  for  material  entering  into  construction,  repairs, 
and  alterations,  and  also  for  necessary  supplies. 

The  entire  proposed  cost  under  this  measure  is  less  than  is 
the  loss  to  the  nation  caused  by  a  fall  in  price  of  the  present 
cotton  crop  of  I  cent  per  pound  by  reason  of  excessive  freight 
rates. 

Meets  a  National  Need 

The  bill  creates  a  government  activity  and  expenditure  for 
the  benefit  of  the  commerce  of  all  the  people.  We  have  now  not 
over  1,400,000  gross  tons  of  shipping  available  for  the  foreign 
trade,  and  much  of  this  has,  indeed,  but  a  nominal  existence, 
because  it  comprises  old  vessels  not  yet  withdrawn  from  registry, 
and  others  whose  cargo  capacity  is  insufficient  to  meet  their  heavy 
operating  cost.  Our  flag  is  rarely  seen  at  hundreds  of  ports 
throughout  the  world.  This  is  a  reason  for  this  new  governmen- 
tal activity — a  full  and  sufficient  reason  for  the  creation  of  a 
corporation  or  corporations  organized  or  to  be  organized  and 
controlled  by  the  government  of  the  United  States  to  purchase, 
charter,  control,  and  operate  merchant  vessels  for  the  benefit  of 
the  agricultural,  manufacturing,  mining,  and  commercial  interests 
of  the  country.  The  reason  is  still  greater  in  the  face  of  the 
fact  that  a  great  foreign  war  has  paralyzed  our  foreign  com- 
merce at  a  moment  when  new  and  profitable  fields  are  opening 
up,  inviting  our  entrance,  while  private  capital  and  enterprise  is 
unable  to  remedy  the  disease. 


AMERICAN   MERCHANT   MARINE  137 

Senate  Document  No.  225  of  the  Sixtieth  Congress,  first  ses- 
sion, entitled  "Development  of  the  American  Ocean  Mail  Service 
and  American  Commerce,"  says,  on  page  65 : 

One  of  the  most  important  features  of  the  voluminous  testimony  taken 
all  over  the  country  by  the  Merchant  Marine  Commission  was  the  insistence 
of  practical  men  of  business — merchants  and  manufacturers  and  bank- 
ers— not  themselves  interested  in  any  way  in  shipowning  or  shipbuilding, 
that  the  lack  of  American  ships  prevented  us  from  securing  an  adequate 
market  abroad  for  the  products  of  American  manufacturing,  mining,  and 
agriculture. 

It  may  be  safely  assumed  that  the  American  people  will  not 
consent  to  any  change  in  the  conditions  provided  by  law  for 
American  seamen.  It  is  furthermore  the  case  that  the  operation 
of  ocean  vessels  presents  problems  of  cost  of  operation  which 
are  not  finally  worked  out.  Statements  are  made  concerning  one 
or  another  element  of  operation  of  American  vessels  which  are 
so  clouded  by  private  interest  or  so  utilized  to  enforce  a  special 
claim  as  to  make  both  the  present  and  the  possible  facts  some- 
what uncertain.  The  pending  measure  will  provide  an  opportu- 
nity which  private  capital  cannot  extend  to  determine,  free  from 
all  question  of  private  interest  or  prejudice,  just  what  the  facts 
are  respecting  the  cost  of  ocean  transportation  under  our  flag. 
The  cheapest  water  transportation  of  bulk  freight  by  steamers  is 
under  the  American  flag,  in  the  specialized  ships  which  carry 
ore  and  other  bulk  cargoes  on  the  Great  Lakes.  The  cheapest 
ocean  transportation  for  bulk  freight  is  also  under  the  American 
flag,  in  the  large  coastwise  schooners  upon  our  Atlantic  coast. 
Private  interests  have  never  yet  undertaken  to  determine  on  any 
considerable  scale  whether  these  facts  can  be  projected  further 
into  a  larger  development  of  our  American  merchant  marine. 

There  is  the  highest  marine  technical  authority  for  saying  that 
American  steamers  can  be  constructed  for  ocean  purposes  so  that 
their  loading  will  be  much  less  costly  than  is  that  of  European- 
designed  steamers ;  and  it  should  be  remembered  that  it  costs 
more  per  unit  to  load  and  unload  cargo  into  and  from  a  vessel 
than  it  does  to  transport  it  across  the  ocean. 

There  are  therefore  problems  in  marine  transportation  of  es- 
sential importance  to  American  commerce,  but  which  private 
capital  has  not  been  able  hitherto  fully  to  work  out.  This  meas- 
ure will  provide  for  the  first  time  adequate  means  for  the  study 
of  these  problems,  through  which  study  both  private  and  public 
interests  will  gain. 


138  SELECTED  ARTICLES 

GOVERNMENT  OWNERSHIP  AND  OPERATION 

OF  MERCHANT  VESSELS  IN  THE  FOREIGN 

TRADE  OF  THE  UNITED  STATES1 

Fears  are  expressed  that  we  will  involve  ourselves  in  com- 
plications with  Great  Britain  and  France  if  we  buy  German  ships. 
That  may  be.  The  bill  does  not  direct  the  shipping  board  to  buy 
ships  of  the  subjects  of  any  particular  nation.  They  have  the 
widest  discretion  in  the  purchase  or  construction  of  vessels.  We 
have  no  reason  to  believe  they  will  act  otherwise  than  with  the 
greatest  care  in  whatever  they  may  do. 

The  President  will  have  the  State  Department  to  advise  him 
on  all  questions  affecting  our  rights  and  duties  as  neutrals.  The 
belligerents  have  their  diplomatic  representatives  in  Washington 
through  whom  objection  to  any  proposed  purchase  may  be  made, 
and  we  should  assume  that  the  President  and  shipping  board  will 
avail  themselves  of  all  sources  of  information  before  acting. 

It  may  be  well,  however,  for  the  benefit  of  those  who  seem  to 
think  we  have  no  rights  as  a  neutral  power  to  buy  ships  of  bel- 
ligerents to  call  attention  to  international  law  governing  the  sale 
of  enemy  ships  to  subjects  of  neutral  states. 

We  quote  from  International  Law,  Oppenheim,  edition  1912, 
Vol.  II,  pp.  117,  118,  "War  and  neutrality,"  "Transfer  of  enemy 
vessels" : 

SEC.  91.  The  question  of  the  transfer  of  enemy  vessels  to  subjects  of 
neutral  states,  either  shortly  before  or  during  the  war,  must  be  regarded 
as  forming  part  of  the  larger  question  of  enemy  character,  for  the  point  to 
be  decided  is  whether  such  transfer  divests  these  vessels  of  their  enemy 
character.  It  is  obvious  that,  if  this  point  is  answered  in  the  affirmative, 
the  owners  of  enemy  vessels  can  evade  the  danger  of  having  their  prop- 
erty seized  and  confiscated  by  selling  their  vessels  to  subjects  of  neutral 
states.  Before  the  declaration  of  London,  which  is,  however,  not  yet 
ratified,  the  maritime  powers  had  not  agreed  upon  common  rules  con- 
cerning this  subject.  According  to  French  practice,  no  transfer  of  enemy 
vessels  to  neutrals  could  be  recognized  and  a  vessel  thus  transferred  re- 
tained enemy  character;  but  this  concerned  only  transfer  after  the  outbreak 
of  the  war;  any  legitimate  transfer  anterior  to  the  outbreak  of  war  did  give 
neutral  character  to  a  vessel.  According  to  British  and  American  practice, 
on  the  other  hand,  neutral  vessels  could  well  be  transferred  to  a  neutral 
flag  before  or  after  the  outbreak  of  war  and  lose  thereby  their  enemy 
character,  provided  that  the  transfer,  though  bona  fide,  was  not  effected 

1 6jd  Congress,   id   Session.     House   Report.     No.    1149.     p.  21-4. 


AMERICAN   MERCHANT   MARINE  139 

either  in  a  blockaded  port  or  while  the  vessel  was  in  transitu,  the  vendor 
did  not  retain  an  interest  in  the  vessel  or  did  not  stipulate  a  right  to 
recover  or  repurchase  the  vessel  after  the  conclusion  of  the  war,  and 
the  transfer  was  not  made  in  transitu  in  contemplation  of  war. 

From  reading  some  of  the  speeches  made  in  the  House  when 
the  war-risk  insurance  bill  was  under  consideration,  it  might  be 
doubted  if  we  have  any  rights  as  neutrals. 

In  the  interest  of  a  well-informed  public  opinion  on  this  sub- 
ject, and  that  doubting  Thomases  may  be  convinced  that  we 
really  have  some  rights  that  belligerents  are  bound  to  respect,  we 
quote  (International  Law,  Oppenheim,  "War  and  neutrality," 
Vol.  II,  edition  1906)  : 

Section  297.  Neutrality  as  an  attitude  of  impartiality  involves  the 
duty  of  assisting  neither  belligerent  either  actively  or  passively,  but  it 
does  not  comprise  the  duty  of  breaking  off  all  intercourse  with  the 
belligerents.  Apart  from  certain  restrictions  necessitated  by  impartiality, 
all  intercourse  between  belligerents  and  neutrals  takes  place  as  before, 
a  condition  of  peace  prevailing  between  them  in  spite  of  the  war  between 
the  belligerents.  This  applies  particularly  to  the  working  of  treaties,  to 
diplomatic  intercourse,  and  to  trade.  But  indirectly,  of  course,  the  condi- 
tion of  war  between  belligerents  may  have  a  disturbing  influence  upon 
intercourse  between  belligerents  and  neutrals.  Thus  the  treaty  rights  of  a 
neutral  state  may  be  interfered  with  through  occupation  of  enemy  terri- 
tory by  a  belligerent;  its  subjects  living  on  such  territory  bear  enemy 
character;  its  subjects  trading  with  the  belligerents  are  hampered  by  the 
right  of  visit  and  search  and  the  right  of  the  belligerents  to  capture 
blockade  runners  and  contraband  of  war. 

Section  314.  There  are  two  rights  and  two  duties  deriving  from 
neutrality  for  neutrals,  and  likewise  two  for  belligerents.  Duties  of  neu- 
trals are,  first,  to  act  toward  belligerents  in  accordance  with  their  attitude 
of  impartiality;  and,  secondly,  to  acquiesce  in  the  exercise  on  the  part  of 
either  belligerent  of  his  right  to  punish  neutral  merchantmen  for  breach 
of  blockade,  carriage  of  contraband,  and  carriage  of  analogous  of  con- 
traband for  the  enemy,  and  accordingly  to  visit,  search,  and  eventually 
capture  them. 

The  duties  of  either  belligerent  are,  first,  to  act  toward  neutrals  in 
accordance  with  their  attitude  of  impartiality;  and,  secondly,  not  to 
suppress  their  intercourse,  and  in  especial  their  commerce,  with  the  enemy. 

Either  belligerent  has  a  right  to  demand  impartiality  from  neutrals, 
whereas,  on  the  other  hand,  neutrals  have  a  right  to  demand  such  behavior 
from  either  belligerent  as  is  in  accordance  with  their  attitude  of  impartiality. 
Neutrals  have  a  right  to  demand  that  their  intercourse,  and  in  especial 
their  commerce,  with  the  enemy  shall  not  be  suppressed;  whereas,  on  the 
other  hand,  either  belligerent  has  the  right  to  punish  subjects  of  neutrals 
for  breach  of  blockade,  carriage  of  contraband,  and  the  like,  and  accord- 
ingly to  visit,  search,  and  capture  neutral  merchantmen. 

Section    398.     The   guaranteed   freedom    of   commerce  making   the    sale 


140  SELECTED   ARTICLES 

of  articles  of  all  kinds  to  belligerents  by  subjects  of  neutrals  legitimate, 
articles  of  conditional  as  well  as  absolute  contraband  may  be  supplied  by 
sale  to  either  belligerent  by  these  individuals.  And  the  carriage  of  such 
articles  by  neutral  merchantmen  on  the  open  sea  is,  as  far  as  inter- 
national law  is  concerned,  as  legitimate  as  their  sale.  The  carrier  of 
contraband  by  no  means  violates  an  injunction  of  the  law  of  nations. 
But  belligerents  have  by  the  law  of  nations  the  right  to  prohibit  and 
punish  the  carriage  of  contraband  by  neutral  merchantmen,  and  the  car- 
rier of  contraband  violates,  for  this  reason,  an  injunction  of  the  bel- 
ligerent concerned.  It  is  not  international  law,  but  the  municipal  law 
of  the  belligerents,  which  makes  carriage  of  contraband  illegitimate  and 
penal. 

The  question  why  the  carriage  of  contraband  articles  may  nevertheless 
be  prohibited  and  punished  by  the  belligerents,  although  it  is  quite  legiti- 
mate as  far  as  international  law  is  concerned,  can  only  be  answered  by  a 
reference  to  the  historical  development  of  the  law  of  nations.  In  con- 
tradistinction to  former  practice,  which  interdicted  all  trade  between  neu- 
trals and  the  enemy,  the  principle  of  freedom  of  commerce  between  sub- 
jects of  neutrals  and  either  belligerents  has  gradually  become  universally 
recognized;  but  this  recognition  included  from  the  beginning  the  right  of 
either  belligerent  to  punish  carriage  of  contraband  on  the  sea.  And 
the  reason  obviously  is  the  necessity  for  belligerents  in  the  interest  of 
self-preservation  to  prevent  the  import  of  such  articles  as  may  strengthen 
the  enemy,  and  to  confiscate  the  contraband  cargo,  and  eventually  the 
vessel  also,  as  a  deterrent  to  other  vessels. 

Ine  present  condition  of  the  matter  of  carriage  of  contraband  is 
therefore  a  compromise.  In  the  interest  of  the  generally  recognized  prin- 
ciple of  freedom  of  commerce  between  belligerents  and  subjects  of  neutrals, 
international  law  does  not  require  neutrals  to  prevent  their  subjects  from 
carrying  contraband;  on  the  other  hand,  international  law  empowers  either 
belligerents  to  prohibit  and  punish  carriage  of  contraband  in  the  same  way 
as  it  empowers  either  belligerents  to  prohibit  and  punish  breach  of  blockade. 

We  should  assume  that  the  President  and  shipping  board,  in 
the  exercise  of  any  powers  granted  or  duties  imposed  by  this  bill, 
will  keep  well  within  our  rights  as  neutrals. 

Many  of  the  lines  now  seeking  shelter  under  the  American 
flag,  although  American  owned,  may  when  the  present  crisis  is 
passed  again  pass  under  foreign  flags  if  it  is  to  their  pecuniary 
advantage  to  do  so. 

While  we  need  merchant  ships  to  meet  the  present  emer- 
gency, let  us  pursue  a  policy  that  will  secure  them  to  us  after 
the  present  conflict  in  Europe  is  passed. 

The  following  table  may  prove  interesting  as  showing  our 
trade  relations  with  Central  and  South  America  at  the  time  the 
table  was  prepared.  We  understand  conditions  have  not  changed 
materially  since  1911. 


AMERICAN   MERCHANT   MARINE 


141 


Trade  between  the  United  States  and  Nations  of  Central  America, 

Mexico,  South  America,  and  the  West  Indies. 

[Imports  and  domestic  exports  for  the  year   1911  into  and  from  the  United 
States     Foreign  commerce  and  navigation  1911,  1091-1124.] 

Imports  into  the  Exports  from  the 

Country                                            United  States  United  States 
Nations    which    by    treaty    enjoy 
equal    rights    with    the    United 
States  as  to  direct  and  indirect 
trade: 

Honduras    $2,657,009  $2,096,424 

Costa    Rica1    4,838,416  3,434,844 

Colombia     8,994,460  4,836,262 

Bolivia     327  891,593 

Paraguay     34,5 16  86,986 

Argentina    29,090,732  43,753,424 

Total    $45,615,460  $55,099,533 

1  Treaties  protect  only  the  direct  trade. 

Nations  with  whom  the  United 
States  have  no  treaties  protect- 
ing trade: 

Mexico     $57,450,111  $60,247,097 

Guatemala     2,562,488  2,409,383 

Salvador    1,463,792  2,090,053 

Nicaragua   1,442,299  2,452,945 

Panama     3,506,735  20,790,661 

Cuba    110,309,468  59,962,955 

Haiti     813,713  5,226,640 

Dominican  Republic 3,632,453  3,741,197 

Venezuela    7,635,256  3,739,030 

Ecuador     3,628,805  2,234,998 

Peru    9,314,030  5,589,604 

Brazil     100,867,184  27,150,672 

Chile    19,941,000  12,037,140 

Uruguay    1,613,736  5,262,367 


Total    $324,181,070       $212,934,742 


Grand   total    $369,796,530       $268,034,275 

The  following  summary  of  the  Latin- American  trade  situa- 
tion, prepared  by  Hon.  John  Barrett,  director  general  of  the  Pan 
American  Union,  may  be  interesting  and  instructive,  as  it  is  of 
recent  date. 

Following  the  receipt  by  cable  this  morning  (September  6) 
from  Latin- American  capitals  of  the  latest  commercial  data.  Di- 


142  SELECTED   ARTICLES 

rector  General  Barrett,  of  the  Pan-American  Union,  has  pre- 
pared without  delay,  for  the  information  of  the  United  States 
commercial  interests,  a  revised  compilation  of  the  very  latest  fig- 
ures of  Latin-American  commerce,  of  which  a  brief  summary  is 
given  below. 

The  twenty  Latin-American  countries  of  Central  and  South 
America  conducted  in  1913  a  foreign  commerce  valued,  approxi- 
mately, at  $3,000,000,000.  The  exact  total  was  $2,870,188,575.  Of 
this  total,  the  imports  were  valued  at  $1,304,261,736  and  the  ex- 
ports at  $1,565,916,812.  This  gives  Latin-America  a  favorable 
balance  of  $261,655,049. 

Of  the  principal  sources  of  origin  of  Latin-American  imports 
Great  Britain  furnishes  products  valued  at  $322,036,347;  United 
States,  317,323,294;  Germany,  $216,010,418;  France,  $103,220,223; 
Italy,  $55,494,413;  Belgium,  $48,747,164;  Austria-Hungary, 
$9,026,478;  Netherlands,  $8,293,859;  Switzerland,  $6,189,050;  all 
other  countries,  $217,290,517.  Although  the  United  States  ranks 
second  the  possibilities  for  building  up  its  trade  are  shown  by 
the  fact  that  the  total  of  Latin- American  imports,  aside  from 
those  coming  from  the  United  States,  amount  nearly  to 
$1,000,000,000,  or  exactly  $986,938,469. 

The  exports  of  Latin  America,  the  European  market  for 
which  is  now  greatly  lessened  by  the  war,  amounted  in  1913, 
approximately  to  $1,566,000,000.  Of  this  total  the  United 
States  was  the  greatest  purchaser,  taking  products  valued  at 
$504,378,212.  Then  came  other  countries  as  follows:  Great  Bri- 
tain, $316,419,914;  Germany,  $192,394,702;  France,  $120,907,415; 
Belgium,  $62,557,566;  Netherlands,  $43,277,631;  Italy,  $27,064,001; 
Austria-Hungary,  $23,294,991 ;  and  all  other  countries 
$247,722,380.  Although,  therefore,  it  will  be  seen  that  Latin 
America  sells  in  large  quantities  to  North  America,  she  exports 
to  other  countries,  the  majority  of  which  are  engaged  in  war, 
products  valued  at  $1,061,538,600. 


AMERICAN   MERCHANT   MARINE  143 

THE  GOVERNMENT  AND  THE  SHIPPING 
PROBLEM1 

In  this  matter  of  foreign  shipping,  the  welfare  of  practically 
all  our  people  is  concerned,  and  I  would  rather  do  an  injustice,  if 
it  meant  doing  an  injustice,  to  a  small  fraction — less  than  one- 
half  of  one  per  cent  of  our  population — than  to  our  entire  popu- 
lation. 

But,  need  there  be  any  competition  between  vessels  belonging 
to  the  Government  as  auxiliaries  to  the  navy  and  Capt.  Dollar  or 
any  other  man  or  company  now  engaged  in  foreign  trade?  I 
think  not.  The  Government  is  doing  a  great  many  things  today 
that  in  a  sense  compete  with  private  citizens.  I  could  give  you  a 
long  list,  starting,  we  will  say,  with  the  parcel  post  and  the  postal 
savings  bank,  going  clear  along  the  line — the  Panama  Railroad, 
owned  by  the  Government ;  the  Alaskan  Railroad,  now  being 
built  and  perhaps  hereafter  to  be  operated  by  the  Government; 
the  steamship  line  from  New  York  to  Colon,  owned  and  oper- 
ated by  the  Government — even  dredging  operations  could  be  per- 
formed by  private  companies  engaged  in  that  business.  Why,  if 
you  stop  to  think  of  it,  the  Congressional  Records  and  public 
documents  could  be  printed  by  private  concerns ;  even  the  money 
in  your  pocket  could  be  printed  and  engraved  by  private  con- 
cerns. Now,  the  Government  is  doing  a  lot  of  things  of  that 
kind,  and  I  have  not  heard  of  any  of  these  industries  that  come 
in  contact  with  the  Government  being  ruined  because  the  Gov- 
ernment was  doing  that  kind  of  work. 

In  fact,  there  are  some  kinds  of  work  that  private  individuals 
would  like  to  do  that  experience  has  shown  it  is  not  best  to  let 
them  do.  Take,  for  instance,  the  furnishing  of  a  supply  of 
water  for  New  Orleans.  This  city  has  its  water  supply  from 
the  Mississippi  River.  It  has  its  nitration  plant  and  it  furnishes 
good  sanitary  drinking  water  to  the  people.  Now,  that  is  a 
proposition  that  is  better  performed  by  a  municipality  than  by  a 
private  company.  It  has  been  found  that  in  many  things  of  that 
kind  you  cannot  trust  individuals,  because  as  cities  grow  and  busi- 
ness increases,  their  ideas  increase  and  unless  they  are  bound 
down  by  the  strictest  ordinances  they  will  add  to  their  profits 
and  do  things  that  are  unjust  to  the  people.  So,  we  all  agree  thaf 

1  By  Hon.  Edwin  F.  Sweet,  Assistant  Secretary  of  Commerce,  Wash- 
ington, D.  C.  Third  National  Foreign  Trade  Convention.  Official  Report, 
p.  205-14. 


144  SELECTED  ARTICLES 

in  many  of  these  things  it  is  better  for  the  city  or  for  the  coun- 
try to  do  its  own  work. 

Now,  in  this  matter  of  shipping,  let  us  not  get  that  confused 
with  the  idea  that  the  Government  is  going  into  the  shipping 
business  wholesale  with  a  view  of  driving  everybody  else  out  of 
the  business.  On  the  contrary,  if  the  Government  should  buy 
these  auxiliaries  or  build  these  auxiliary  ships  for  the  navy  in  the 
navy  yards,  the  purpose,  as  I  understand  it,  would  be  to  lease 
them  to  private  companies  or  individuals,  with  a  clause  in  the 
lease  providing  that  the  Government  may  cancel  that  lease  when- 
ever it  sees  fit  or  may  need  these  vessels  in  time  of  war  or  other- 
wise. I  dare  say  it  will  be  claimed  that  it  will  be  difficult  to 
lease,  to  find  lessees,  for  these  vessels,  but  I  think  not.  There 
are  many  places  in  the  country,  and  between  different  countries, 
where  vessels  are  needed,  not  only  now,  but  in  normal  times.  I 
am  not  speaking  now  of  those  tremendous  freight  rates  way  out 
of  sight,  but  in  normal  times  the  Government  could  afford  to  lease 
these  vessels  at  a  comparatively  low  cost  or  low  price,  or  charter 
them,  and  private  companies  could  afford  to  pay  it  rather  than  to 
own  their  own  ships,  and  the  men,  the  sailors  upon  these  ships, 
under  a  proper  provision  of  the  lease,  could  be  American  citizens 
who  would  agree  by  a  part  of  the  contract  that  for  extra  wages 
which  should  be  paid  them,  they  would  hold  themselves  ready 
to  go  with  the  vessels  in  time  of  war  and  stand  up  for  their 
Government  and  aid  it  in  time  of  need. 

Now,  I  am  not  going  to  elaborate  at  great  length.  My  time 
will  not  permit,  but  the  point  is  that  these  leases  could  be  made, 
in  my  judgment — at  least,  it  could  be  tried. 

I  have  said  enough  to  indicate  that  there  are  some  very  com- 
plicated questions  in  connection  with  this  whole  marine  problem, 
and  that  is  what  I  have  wanted  to  bring  your  minds  to,  not  to 
the  fact  that  any  precise  thing  should  be  done,  but  to  the  fact 
that  certain  things  can  be  done,  and  that  some  way  ought  to  be 
provided  for  doing  them,  and  that  brings  me  to  the  point  where 
I  stand  practically  upon  the  same  platform  as  my  friend  Capt. 
Dollar  and  this  organization,  and  that  is,  that  there  ought  to  be 
appointed  a  non-partisan  expert  commission  of  men  who  thor- 
oughly understand  the  shipping  business,  better  than  you  do, 
better  than  I  do,  as  well  as  Capt.  Dollar  does,  and  without  any 
personal  interest  in  the  business,  to  formulate  a  plan  upon  which 
our  merchant  marine  can  be  built  up. 


AMERICAN   MERCHANT   MARINE  145 

I  am  not  going  to  elaborate  that  point  to  any  great  extent.  I 
differ  from  these  gentlemen  somewhat  along  this  line :  they  favor, 
and  this  organization  favors,  a  body  of  that  kind  that  shall  make 
an  investigation  and  report  to  Congress.  I  want,  in  view  of  the 
exigencies  of  the  case — I  want  that  commission  to  be  a  committee 
with  power  to  act,  and  to  act  promptly.  It  would  be  just  as  safe 
a  body  to  entrust  this  great  big  problem  to  as  a  tariff  commission 
would  be  to  trust  the  tariff  problem  to,  or  as  the  Interstate  Com- 
merce Commission  is  to  trust  the  problems  that  come  before  it 
to.  We  have  found  that  if  commissions  of  this  kind  fail  to  do 
their  duty,  there  is  a  way  of  putting  them  out  of  business.  We 
found  that  with  regard  to  the  Commerce  Court.  Congress  can 
refuse  appropriations  for  any  commission  or  committee.  It  rests 
in  the  men  that  you  send  to  Congress,  your  representatives,  to 
say  whether  a  commission  of  that  kind  shall  live  or  die,  and  it 
could  only  live  by  reason  of  its  good  work. 

Now,  you  cannot  assume,  my  friends,  that  the  Government  of 
the  United  States  is  engaged  in  the  business  that  it  is  doing  for 
the  purpose  of  injuring  the  people  of  the  United  States.  Why, 
look  at  our  own  Department  of  Commerce — look  at  the  foreign 
attaches;  look  at  that  exhibit  out  in  that  room  there;  see  what 
the  Government  is  doing  to  help  foreign  trade;  see  what  the 
Government  is  doing  through  its  lighthouse  service,  through  its 
coast  survey,  in  charting  our  coasts ;  see  what  it  is  doing  through 
our  Bureau  of  Standards  to  help  manufacturers  in  your  dye 
business  and  everything  else.  Why?  at  the  beginning  of  the  war, 
Dr.  Stratton,  of  the  Bureau  of  Standards,  told  me  he  had  been 
trying  for  years  to  get  American  chemists  to  make  their  own 
chemicals  and  dyes,  that  they  could  have  done  it  just  as  well  as 
not,  but  they  thought  it  was  too  small  for  them,  too  petty,  it 
didn't  look  big  enough  for  Americans  to  do,  and  he  thought  that 
one  of  the  assets  of  the  European  war  would  be  that  it  would 
force  us  to  do  a  lot  of  things  we  ought  to  have  done  of  our  own 
accord.  ... 

So,  I  leave  you  with  this  thought:  the  Government  of  the 
United  States  is  your  government.  It  is  you.  In  the  final  analy- 
sis it  is  you,  it  is  the  people  of  the  United  States,  the  planters, 
the  farmers,  those  who  are  engaged  in  the  fundamental  indus- 
tries and  are  so  much  interested  in  foreign  trade  and  in  estab- 
lishing it,  the  merchants,  the  manufacturers.  The  Government  all 
along  the  line  is  doing  what  it  can  to  help,  and  not  to  hurt,  and 

12 


I46  SELECTED   ARTICLES 

in  shipping  let  there  be  provided  a  board  of  the  right  kind  of 
men,  disinterested  experts,  non-partisan.  This  is  no  party  ques- 
tion. It  does  not  make  any  difference  whether  we  agree  on  other 
national  problems :  this  is  one  that  affects  us  all,  and  we  ought 
all  to  lay  aside  our  petty  partisanship  and  join  hand  in  hand  and 
shoulder  to  shoulder  to  give  us  the  merchant  marine  that  we 
ought  to  have  had. 


AMERICAN  MERCHANT  MARINE1 

Objections  to  the  shipping  bill  now  before  Congress  have 
developed  from  two  sources.  It  was  to  be  expected  that  there 
would  be  objection  by  shipping  interests  which  have  been  reaping 
the  benefit  of  American  inactivity  in  the  foreign  shipping  trade. 
It  was  also  to  be  expected  that  certain  financial  interests  and 
their  affiliations,  especially  those  interested  in  foreign  shipping, 
would  object  to  a  Government  merchant  marine. 

Opponents  to  the  bill  have  advanced  arguments  to  sustain 
their  position,  but  not  one  of  them  will  stand  analysis.  Many 
newspapers  and  periodicals  are  opposing  the  bill,  but  the  fact 
that  they  enjoy  considerable  advertising  and  other  patronage 
from  the  steamship  lines  and  the  financial  interests  that  are  op- 
posing the  bill  may  go  far  toward  explaining  their  position  on 
this  great  question  of  an  American  merchant  marine. 

(i)  Opponents  to  the  bill  say  that  there  are  a  large  number 
of  ships  at  present  in  American  harbors  unable  to  get  cargoes ; 
hence  there  is  no  need  for  a  government  merchant  marine. 

A  recent  investigation  has  proven  this  not  to  be  true.  Ships 
seek  cargoes  at  all  times,  but  the  present  chartering  market  is 
very  firm,  and  when  the  question  of  foreign  credits  is  settled  and 
commerce  begins  to  move,  as  it  must  very  shortly,  there  will  be 
a  positive  famine  in  ships,  as  over  5,000,000  tons  of  German  and 
Austrian  shipping  are  completely  out  of  commission,  to  say 
nothing  of  the  large  number  of  British,  French,  and  Russian 
merchant  ships  which  have  been  taken  over  by  their  respective 
governments  for  transports  and  naval  auxiliaries. 

There  are,  all  told,  considerably  less  than  100  American  ships 

1  An  articfe  prepared  by  the  Southern  Commercial  Congress  on  the 
proposed  establishment  of  a  merchant  marine.  Printed  as  Senate  Docu- 
ment No.  60 1.  6jd  Congress,  ad  Session. 


AMERICAN   MERCHANT   MARINE  147 

in  the  foreign  trade  in  the  whole  world,  including  all  of  the 
ships  which  have  just  taken  American  registry  to  secure  the  pro- 
tection of  the  flag  on  account  of  the  war.  None  of  these  ships 
are  idle.  Therefore,  even  though  there  were  hundreds  of  idle 
ships  in  every  American  harbor,  it  would  not  alter  the  necessity 
for  passing  the  shipping  bill  now  before  Congress,  as  all  such 
ships  would  be  foreign  ships,  and  the  object  of  this  bill  is  to 
establish  an  American  merchant  marine. 

(2)  Opponents  to  the  bill  say  that  if  the  government  will 
not  enter  the  shipping  business  private  capital  will  provide  an 
American  merchant  marine. 

This  is  rather  inconsistent  with  their  statement  that  the  har- 
bors are  full  of  idle  ships,  for,  if  that  is  true,  private  capital  will 
find  no  attraction  in  the  shipping  business. 

What  likelihood  is  there  to  obtain  private  capital  for  this  new 
business,  especially  to  the  amount  contemplated  by  the  shipping 
bill,  $40,000,000,  when  long-established,  going  concerns  find  it 
impossible  to  obtain  money  except  at  heavy  rates. 

When  the  city  of  New  York  must  pay  7  per  cent,  including 
bankers'  commissions,  for  a  loan  of  $100,000,000;  when  the  State 
of  Tennessee  found  it  most  difficult  to  obtain  a  loan  of  $1,400,000, 
it  is  quite  certain  that  private  capital  will  be  unable  to  provide 
an  American  merchant  marine,  especially  as  it  did  nothing  in  the 
matter  while  the  opportunity  was  open  during  the  past  fifty  years. 

(3)  Opponents  to  the  bill  say  that  the  government  will  lose 
much  money  in  this  business. 

This  argument  has  been  their  favorite  one.  The  bugaboo  of 
increased  taxes,  "loss  of  the  initial  investment  every  three  years," 
and  much  more  of  the  same  nature  has  been  circulated  in  an 
effort  to  defeat  the  bill. 

The  shipping  business  is  one  of  the  most  profitable  in  the 
world.  Special  Diplomatic  and  Consular  Reports,  page  39,  says : 

The  White  Star  Line,  in  1910,  earned  a  net  profit  of  £540,000  sterling 
on  a  capital  of  £750,000  sterling  after  writing  off  £370,016  sterling  for 
depreciation.  A  dividend  of  30  per  cent  was  paid  in  that  year. 

The  Holland-Amerika  Line  earned  about  50  per  cent  net  on 
its  capital  during  the  first  fiscal  year  of  1913.  The  Hamburg- 
American  Line  earned  about  30  per  cent  net  during  its  fiscal  year 
of  1913.  These  are  only  a  few  specific  instances  of  steamship- 
line  earnings.  They  are  not  at  all  unusual,  but  are  the  regular 
thing  in  the  shipping  business. 


148  SELECTED   ARTICLES 

F.  E.  Dixon  &  Co.,  of  London,  who  own  and  operate  a  large 
fleet  of  "tramp"  freighters,  showed  earnings  of  about  50  per  cent 
net  last  year,  which  proves  that  steamship  earnings  are  large  in 
the  irregular  services  as  well  as  in  the  regular  lines.  In  fact,  the 
profits  in  the  steamship  business  are  so  large  that  frequently  the 
entire  cost  of  a  ship  is  earned  in  two  years. 

The  question  will  arise,  Why  have  not  Americans  gone  into 
such  profitable  business?  The  answer  is,  For  the  same  reason 
that  Americans  have  neglected  the  vast  foreign  export  trade; 
they  have  been  too  busy  with  their  industries  at  home. 

But,  unlike  the  export  trade,  which  each  manufacturer  can 
work  up  individually,  to  establish  an  adequate  merchant  marine  is 
so  large  an  undertaking  at  this  time  and  involves  so  large  an 
amount  of  money,  that  if  it  is  to  be  done  at  all,  it  must  be  done 
by  the  government. 

(4)  Opponents  to  the  bill  say  that  there  will  be  danger  of 
the   United   States  violating  neutrality  if  it  operates  merchant 
ships  at  this  time. 

The  report  of  the  Committee  on  the  Merchant  Marine  says : 

We  have  rights  as  neutrals  as  well  as  duties  to  be  observed.  .  .  .  The 
President  will  have  the  State  Department  to  advise  him  on  all  questions 
affecting  our  rights  and  duties  as  neutrals.  .  .  .  We  should  assume  that 
the  President  and  shipping  board,  in  the  exercise  of  any  powers  granted 
or  duties  imposed  by  this  bill,  will  keep  well  within  our  rights  as  neutrals. 

On  this  point  the .  Secretary  of  the  Treasury,  McAdoo,  also 
says: 

The  board  proposed  in  this  bill  consists  really  of  the  President  of  the 
United  States  and  certain  Cabinet  officers  therein  mentioned.  I  think  there 
is  no  more  punctilious  citizen  of  the  United  States  with  respect  to  the 
neutrality  of  this  country  than  the  President  of  the  United  States. 
I  think  you  may  safely  depend  on  it,  if  this  bill  is  passed  and  this  board 
is  vested  with  power  to  act,  that  that  power  will  be  exercised  in  such  a 
way  that  the  neutrality  of  this  country  will  be  preserved. 

(5)  Opponents  to  the  bill  make  an  alternative  proposition 
that  we  should  build  up  an  American  merchant  marine  by  grant- 
ing subsidies. 

Subsidy  seekers  have  managed  to  create  a  belief  that  the  mer- 
chant marines  of  European  countries,  especially  the  merchant 
marines  of  the  two  greatest  maritime  countries  in  the  world, 
Great  Britain  and  Germany,  have  been  built  up  by  granting  sub- 
sidies to  its  shipping.  Neither  of  these  countries  grant  subsidies 
except  to  a  very  limited  extent  and  for  very  special  service. 


AMERICAN   MERCHANT   MARINE  149 

The  Hamburg- American  Line,  the  largest  and  perhaps  the 
most  successful  steamship  company  in  the  world,  has  never  re- 
ceived a  subsidy.  A  moderate  subsidy  was  granted  by  Great 
Britain  to  the  Cunard  Co.  in  connection  with  the  steamers  Mau- 
retania  and  Lusitania,  but  that  was  chiefly  to  keep  the  Cunard 
Co.  from  selling  out  to  the  International  Mercantile  Marine,  the 
combination  organized  by  J.  P.  Morgan  &  Co.  Over  90  per  cent 
of  the  total  tonnage  of  Great  Britain  does  not  receive  a  farthing 
of  subsidy. 

It  will  surprise  many  to  know  that  the  United  States  pays  a 
larger  subsidy  to  four  American  ships  owned  by  the  Interna- 
tional Mercantile  Marine,  namely,  the  New  York,  Philadelphia, 
St.  Paul,  and  St.  Louis,  than  is  paid  by  any  foreign  nation  for 
similar  service.  This  country  pays  to  these  ships  an  annual  sub- 
sidy of  about  $735,000,  and  obtains  practically  nothing  in  return 
for  this  except  the  carrying  of  the  mails  on  these  steamers,  which, 
at  regular  rates,  would  amount  to  only  a  trifling  fraction  of  the 
amount  of  the  subsidy.  As  a  matter  of  fact,  most  of  our  mail 
goes  forward  on  foreign  ships,  as  they  are  much  faster  and  they 
sail  more  frequently,  the  subsidized  American  ships  being  among 
the  smallest  and  most  out-of-date  steamers  in  the  North  Atlantic 
trade. 

The  extraordinarily  large  profits  in  the  steamship  business 
show  that  steamships  can  be  operated  profitably  under  the 
American  flag  without  a  subsidy,  in  spite  of  the  somewhat  higher 
wages  and  better  living  requirements  of  American  seamen ;  there- 
fore it  will  be  well-nigh  impossible  to  obtain  a  subsidy  simply 
to  make  up  the  extra  profits  possible  under  foreign  flags.  For 
the  same  reason  we  will  never  have  an  American  merchant  ma- 
rine unless  it  is  established  by  the  government,  because  such  pri- 
vate capital  as  may  go  into  the  foreign  shipping  business  will 
operate  under  foreign  flags  to  get  the  benefit  of  cheaper  opera- 
tion when  the  dangers  of  war  are  passed. 

The  present  war  has  made  it  possible  to  secure,  at  most  fa- 
vorable prices,  an  excellent  choice  of  modern,  up-to-date  steamers 
of  different  nationalities,  also  many  steamers  not  yet  out  of  the 
builders'  hands,  hence  not  yet  nationalized,  at  less  than  the  con- 
tract price.  Also,  as  a  result  of  the  war,  the  financial  success  of 
the  enterprise  is  more  fully  assured,  as  we  will  not  have  the  com- 
petition of  the  warring  nations  to  the  same  extent  that  we  would 
have  in  times  of  peace. 

The  $40,000,000  called  for  by  the  shipping  bill  will  not  be  an 


ISO  SELECTED  ARTICLES 

expense,  as  the  bill's  opponents  are  pleased  to  call  it,  but  it  will 
be  an  investment  of  the  first  class  without  considering  the  enor- 
mous advantage  to  the  whole  people  of  the  United  States  in 
having  an  American  merchant  marine  under  government  control 
and  the  great  reduction  in  rates  that  will  be  possible,  as  the  gov- 
ernment will  not  desire  net  earnings  of  from  30  to  50  per  cent 
on  its  investment,  but  will  be  content  with  only  a  fair  return. 

It  would  be  little  short  of  a  political  and  economic  crime  if 
we  did  not  avail  ourselves  of  the  present  almost  unbelievable  op- 
portunity to  do  in  a  most  practical  manner  that  which  Congress 
was  endeavoring  to  do  before  the  commencement  of  the  war  as 
best  it  could  by  means  of  the  Weeks  bill. 


NEGATIVE  DISCUSSION 

PROMOTION  OF  FOREIGN  COMMERCE  OF  THE 
UNITED  STATES :  VIEWS  OF  THE  MINORITY1 

The  facts  in  regard  to  the  present  situation  in  relation  to 
shipping  seem  to  be  about  as  follows : 

According  to  a  report  of  Mr.  E.  T.  Chamberlain,  Commis- 
sioner of  Navigation,  filed  with  the  Committee  on  Interoceanic 
Canals  on  April  20,  1914,  the  gross  tonnage  of  merchant  vessels 
of  the  several  countries  as  recorded  in  Lloyd's  Register  for  the 
current  year  amounted  to  46,970,113  tons,  being  the  aggregate  of 
a  total  of  30,591  vessels,  including  both  steam  and  sailing  craft. 

Number  and  net  and  gross  tonnage  of  steam  and  sailing  vessels  of 
over  100  tons  of  the  several  countries  of  the  world,  as  recorded 
in  Lloyd's  Register  for  1913-14. 

[Report  of  the  Commissioner  of  Navigation  (1913).] 

Steam  Sail  Total 

Flag.             No.       Net  tons     Gross  tons  No.  Net  tons  No.       Tonnage 
British: 
United 

Kingdom     8,514   11,109,560   18,273,944  700      422,293  9,214   18,696,237 

Colonies     ..    i,495        9*5,950     1,575,223  578       160,083  2,073     i,735,3o6 


Total..      10,009   12,025,510   19,849,167   1,278      582,376   11,287  20,431,543 


American  (U.  S.) : 

Sea     ....    1,209     1,280,958     1,971,903   1,487  1,026,554     2,696     2,998,457 
Northern 

lakes     .       593      1,724,566     2,285,836        34        96,854        627     2,382,690 
Philippine 

Islands        69          27,080          44,555  8  1,934          77          46,489 


Total     ...    1,871     3,032,604     4,302,294   1,529   1,125,342     3,400     5,427,636 


Congress,   3d  Session.     Senate   Report  No.   841.     Part  2. 


152 


SELECTED   ARTICLES 


Flag. 

Argentinian. . 

Austro- 

Hungarian. 

Belgian    

Brazilian    . . . 

Chilean    

Chinese    

Cuban    

Danish     

Dutch     

French     

German  .... 

Greek     

Haitian    

Italian    

Japanese    . . . 

Mexican    . . . 

Norwegian     . 

Peruvian    . . . 

Portuguese    . 

Roumanian    . 

Russian  .... 

Siamese    .'... 

Spanish    

Swedish  .... 

Turkish   .... 

Uruguayan    . 

Venezuelan   . 

Other  coun- 
tries1 . . , 


No. 

236 


Steam 

Net  tons     Gross  tons 
107,172         180,576 


419 

629,444 

1,010,347 

164 

186,581 

296,196 

402 

188,645 

3i3,4i6 

95 

68,834 

108,491 

66 

55,375 

86,690 

55 

37,902 

60,895 

552 

415,880 

711,094 

662 

794,840 

1,286,742 

987 

1,029,113 

1,793,310 

2,019 

2,877,887 

4,743,046 

365 

443,771 

705,897 

5 

2,017 

3,387 

59i 

773,848 

1,274,127 

i,037 

956,702 

1,500,014 

43 

22,838 

37,920 

1,597 

1,122,577 

1,870,793 

20 

»3,352 

25,814 

105 

55,903 

92,636 

32 

25,011 

45,123 

716 

463,022 

790,075 

12 

7,955 

12,936 

547 

506,073 

826,261 

1,043 

551,964 

943,926 

135 

65,402 

111,848 

SO 

38,360 

62,215 

8 

2,420 

4,232 

No. 
72 


8 
57 
36 

4 
259 

97 
565 
302 

77 


Sail 
Net  tons 

34,259 


1,067 
8,190 
16,221 


64  1 

50,960 

23,107 

407,854 

339,oi5 

16,885 


Total 

No.       Tonnage 
308        214,835 


523      247,815 


54 


594 
40 
103 

500 

60 
393 
137 

15 
5 


l6,027  29,709  22 


2,129 

587,097 

19,700 

27,943 

285 

184,103 

14,734 

103,344 

45,450 

13,3l6 

679 

7,123 


427 
172 
459 
131 
66 

59 

811 

759 

1,552 

2,321 

442 

5 

1,114 

i,037 

52 

2,191 

60 

208 

33 

1,216 

12 

607 

1,436 

272 

65 

13 
76 


1,011,414 

304,386 

329,637 

139,792 

86,690 

6i,536 

762,054 

1,309,849 

2,201,164 

5,082,061 

722,782 

3,387 

1,521,942 

1,500,014 

40,049 

2,457,890 

45,514 

120,579 

45,408 

974,178 

12,936 

840,995 

1,047,270 

157,298 

75,531 


36,832 


Total      ..23,897  26,517,029  43,079,177  6,694  3,890,936  30,591  46,970,113 

It  will  be  noticed  that  this  report  includes  all  vessels  of  over 
loo  tons  burden,  and  that  a  considerable  percentage  of  it  must 
naturally  be  engaged  in  domestic  or  coastwise  trade. 

It  is  difficult  to  determine  what  portion  of  this  total  has  been 
withdrawn  as  the  result  of  the  war.  A  circular  issued  by  the 
Boston  Maritime  Association  under  date  of  December  15,  1914, 
gives  the  following  estimate: 

German  and  Austrian  steam  tonnage,  2,438  vessels     3,507,331 
British  vessels  under  government  charter,  500  vessels     1,700,000 

British    vessels   seized 265,000 

Vessels  lost  by  mines,  etc 330,683 

Tons   5,803,014 

1  Includes  Bulgaria,  Colombia,  Costa  Rica,  Ecuador,  Egypt,  Honduras, 
Liberia.Montenegro,  Nicaragua,  Oman,  Panama,  Persia  Salvador,  Samoa, 
Sarawak,  Tunis,  Zanzibar,  etc. 


AMERICAN   MERCHANT   MARINE  153 

The  feature  of  the  shipping  situation  which  has  attracted  the 
most  attention,  as  indicated  in  the  estimate  quoted  above,  has 
been  the  alleged  scarcity  of  tonnage  due  to  the  seizure  of  nu- 
merous German  and  Austro-Hungarian  ships  and  the  withdrawal 
of  the  remainder  from  service,  also  the  chartering  by  the  British 
and  French  Governments,  especially  by  the  British,  of  a  consid- 
erable share  of  the  tonnage  of  those  countries  for  military  and 
naval  purposes. 

The  per  cent  of  loss  in  the  carrying  capacity  of  ocean  trade 
due  to  these  causes  has  been  variously  estimated.  Any  consider- 
able reduction  would,  of  course,  naturally  produce  serious  conse- 
quences. It  should  not,  however,  be  forgotten  that  the  normal 
results  are  to  a  large  extent  offset  by  other  considerations.  No 
doubt  the  export  of  certain  classes  of  commodities  from  the 
United  States  to  foreign  countries  has  somewhat  increased  be- 
cause of  the  exceptional  demands  for  munitions  of  war  and  other 
materials,  of  which  an  increased  supply  is  needed  or  which  were 
formerly  supplied  from  other  sources.  There  is  also  an  increased 
demand  for  food  products.  Some  commodities  which  were  usu- 
ally carried  directly  into  such  countries  as  Denmark,  Holland, 
France,  and  Germany  are  now  sent  from  the  United  States,  as 
in  the  case  of  tea,  coffee,  or  cocoa.  Other  countries  near  to  the 
theater  of  war  are  seeking  to  secure  a  supply  of  certain  articles 
with  a  view  to  providing  against  such  exigencies  as  may  arise. 

On  the  other  hand,  there  is  not  merely  a  decrease  in  the  ex- 
ports and  imports  from  Germany  and  Austria,  but  their  foreign 
trade  by  sea  has  practically  disappeared.  This  operates  as  an 
offset  to  the  shortage  of  vessel  tonnage.  Also  in  other  localities, 
especially  in  South  America,  financial  conditions  and  the  with- 
drawal of  credits  usually  extended  have  limited  buying  capacity 
and  consequently  exports  to  those  countries,  which  formerly  con- 
sisted largely  of  material  for  railways  and  public-service  im- 
provements have  diminished  considerably.  It  is  not  improbable 
that  on  the  whole  the  world's  trade  has  diminished  in  a  ratio 
commensurate  with  the  loss  of  ocean  tonnage.  So  far  as  the 
United  States  is  concerned  this  loss  is  further  compensated  by 
the  fact  that  such  vessels  as  are  able  to  continue  in  the  trade 
naturally  seek  the  more  profitable  freight  of  a  neutral  country. 
The  number  of  ships  which  have  entered  American  registry  since 
the  outbreak  of  the  war  and  the  domestic  shipping  which  has 
engaged  in  the  foreign  trade  are  evidences  of  this  fact. 


154  SELECTED   ARTICLES 

That  there  has  been  a  very  considerable  increase  in  freight 
rates  along  some  routes  and  for  certain  commodities  is  not  to  be 
denied.  It  would,  however,  be  easy  to  draw  the  incorrect  con- 
clusion that  this  is  wholly  due  to  lack  of  available  tonnage.  As  a 
matter  of  fact,  at  least  until  very  recently,  there  has  been  an 
abundance  of  unchartered  tonnage  available  at  American  ports. 
The  same  bulletin  of  the  Boston  Maritime  Association,  already 
quoted,  contains  the  following  paragraph : 

Repeated  offers  of  sail  tonnage  for  coal  to  South  American  ports  at 
equitable  rates  have  no  results,  and  there  are  at  present  tied  up  in  Boston 
four  steel  ships  for  which  payable  business  can  not  be  obtained.  This 
association  has  given  a  list  of  Boston-owned  tonnage  to  the  Secretary  of 
Commerce,  representing  over  200,000  dead-weight  capacity,  which  could  be 
chartered  foreign  if  rates  could  be  obtained  that  would  pay  for  round. 

The  actual  reason  for  the  increase  in  freight  rates  does  not 
seem  to  be  the  result  of  the  lack  of  tonnage.  The  existing  war 
furnishes  other  adequate  causes  for  the  present  situation.  The 
following  are  the  abnormal  or  exceptional  conditions  created  by 
it: 

1.  The  derangement  caused  by  the  war,  which  includes  the 
danger  of  capture  or  detention  and  the  scattering  of  mines  near 
to  harbors  and  along  navigable  routes.     All  of  these  greatly  in- 
crease the  risk  of  navigation  and  consequently  the  cost  of  carry- 
ig  freight. 

2.  The  probable  delay  in  the  handling  of  boats  engaged  in 
trade  with  countries  involved  in  the  war,  due  to  the  fact  that  the 
harbors  of  the  belligerents  are  congested  by  the  presence  of  large 
fleets  of  vessels.     It  is  also  difficult  to  obtain  men  for  loading  and 
unloading  and  for  necessary  repairs.     There  is  a  further  difficulty 
in  obtaining  access  to  wharves  and  dry  docks.    As  illustrations  of 
the  congestion  and  delay  in  foreign  ports  the  following  specific 
cases  may  be  mentioned :  A  ship  sailed  from  Baltimore  to  Havre, 
the  voyage  occupying  about  14  days.     Under  normal  conditions 
she  would  have  discharged    her  outgoing  cargo  and  be  ready  to 
return  with  whatever  cargo  was  obtainable  in  7  to  10  days.    The 
boat  arrived  at  Havre  at  the  end  of  November  and  was  detained 
there  over  20  days.    It  is  not  certain  that  she  has  left  yet,  as  she 
was  compelled  to  go  to  Cardiff  for  coal,  which  caused  additional 
delay. 

The  ship  Missourian  sailed  from  New  York  November  29  for 
a  French  port.  She  carried  some  1,500  horses  and  could  have 


AMERICAN    MERCHANT   MARINE  155 

carried  8,000  tons  of  cargo  at  $8  a  ton.  It  was  ascertained  that 
she  would  be  detained  in  the  discharge  of  her  cargo  and  there 
would  be  no  profit  for  the  freight  carried,  even  at  the  unusual 
price  named.  Instances  have  occurred  in  which  boats  have  been 
detained  in  port  for  almost  60  days  in  discharge  of  general  cargo. 

3.  When  a  boat  sails  to  a  foreign  port  there  is  no  certainty 
that  she  can  obtain  a  cargo  or  supply  of  coal  for  the  return  voy- 
age.    It  is  desirable  to  carry  coal  for  a  round  trip  from  the  port 
of  departure,  which,  to  the  same  extent,  reduces  cargo  capacity. 

4.  The  additional  cost  of  war-risk  insurance,  ranging  from  a 
minimum  of  three-eighths  per  cent  for  the  round  voyage  upon 
cargo  or  vessels  engaged  in  trade  in  the  Western  Hemisphere  to 
3  per  cent  for  the  round  trip  to  Rotterdam  and  5  per  cent  for  the 
round  trip  to  Bremen,  and  the  limit  of  the  amount  to  $750,000 
which  the  Government  War  Risk  Bureau  will  place  on  both  ship 
and  cargo. 

5.  At  the  beginning  of  the  war  the  situation  was  complicated 
by  the  breakdown  of  exchanges  and  credits.     This  condition  still 
exists  in  some  localities.     The  factor  which  prevented  the  carry- 
ing of  exports  abroad  was  by  no  means  scarcity  of  boats ;  the 
problem  was  rather  a  financial  one.     Indeed,  in  the  early  months 
of  the  war  there  was  a  large  amount  of  shipping  in  ports  of  the 
United   States,  not  only  upon  the  Atlantic,   but   even  more  in 
Gulf  ports.     These  boats  awaited  cargoes,  chiefly  grain  and  cot- 
ton, which  under  normal  conditions  would  have  been  sent  at  that 
time,  but  which  were  withheld  for  reasons  other  than  lack  of 
tonnage.    An  important  feature  of  the  situation  relating  to  the 
cotton  trade  was  the  determination  of  the  Liverpool  Cotton  Ex- 
change not  to  make  purchases.    It  will  be  particularly  noted  that 
none  of  the  causes  of  increased  freight  rates  will  be  remedied  by 
an  increase  in  the  number  of  available  vessels. 

As  a  matter  of  fact,  except  in  relation  to  consignments  to 
ports  of  belligerents  which  are  regarded  as  especially  dangerous, 
notably  those  in  the  North  Sea,  and  in  relation  to  cargoes  of 
doubtful  character,  that  is,  those  that  might  be  construed  to  be 
contraband,  the  rates  have  not  increased  in  as  great  a  degree  as 
seems  to  be  popularly  assumed. 

A  special  bulletin  regarding  the  foreign  shipping  situation  is- 
sued by  R.  G.  Dun  &  Co.,  under  date  of  October  19,  1914,  con- 
tains the  following  paragraph : 

Maritime  freight  rates  in  general  have  declined  as  compared  with  three 


156  SELECTED   ARTICLES 

weeks  ago.  To  Europe  the  excess  over  normal  rates  does  not  exceed  25 
per  cent  on  the  average.  To  Asia,  Africa,  Australia,  and  New  Zealand 
the  premium  varies  from  20  to  25  per  cent.  .  .  . 

Special  bulletin  of  R.  G.  Dun  &  Co.,  under  date  of  December 
29,  1914,  contains  the  following  items: 

The  ocean  rates  to  Asia,  Atrica,  Australia,  and  New  Zealand  are  as 
a  rule  either  no  higher  or  somewhat  less  than  they  were  last  October. 
To  the  west  coast  of  South  America  the  rates  are  very  nearly  what  they 
were  prior  to  the  outbreak  of  the  war. 

Rates  of  war-risk  insurance  have,  on  the  whole,  declined  in  the  last 
two  months. 

Both  these  bulletins  indicate  that  from  all  the  more  important 
ports  of  the  United  States  regular  sailings  have  been  resumed, 
and  that  generally  speaking  there  is  sufficient  tonnage  to  meet 
all  demands. 

It  will  be  found  that,  generally  speaking,  rates  of  freight  have 
not  increased  more  than  25  per  cent  during  the  war  period  to  any 
South  American  port.  In  many  instances  the  increase  is  very 
slight. 

While  the  rates  to  European  ports  have  naturally  increased  in 
greater  ratio  the  increase  has  not  been  as  exceptional  as  might 
have  been  expected.  In  fact  the  increase  has  not  been  dispropor- 
tionate to  increases  which  have  occurred  in  times  of  peace.  It 
will  be  noticed,  for  example,  that  the  average  rates  on  grain  and 
flour  from  New  York  to  London  for  the  year  1912  were  nearly 
double  those  for  1911;  also  that  rates  on  grain  from  New  York 
to  Liverpool  were,  at  some  time  during  the  quarter,  quoted  as 
low  or  lower  during  the  last  three  months  of  the  year  1914  as  the 
maximum  rate  for  the  same  period  of  the  year  1912. 

The  Remedy  Proposed 

In  its  more  important  features  the  above  is  substantially  the 
situation  with  respect  to  which  the  proposed  bill  must  be  con- 
sidered. In  the  first  place  it  is  doubtful  whether  the  conditions 
outlined  constitute  an  emergency  calling  for  a  departure  from 
all  former  policies  of  the  federal  government  in  relation  to 
American  industries.  In  the  second  place,  if  this  be  conceded, 
will  the  provisions  of  the  proposed  measure  effect  a  satisfactory 
remedy,  waiving  entirely  for  the  moment  all  fundamental  ques- 
tions as  to  the  expediency  of  government  ownership?  The  advo- 


AMERICAN   MERCHANT   MARINE  157 

cates  of  the  measure  undoubtedly  expect  to  accomplish  two  main 
purposes — one  to  promote  the  development  of  trade  with  Central 
and  South  American  -countries  and  the  other  to  lower  freight 
rates  on  American  commodities  to  European  ports.  It  is  quite 
out  of  the  question  that  the  means  proposed  in  this  bill  will  ac- 
complish either.  In  the  first  place  it  would  be  impossible  to  build 
sufficient  ships  in  a  short  period  of  time  to  produce  any  material 
effect  upon  the  amount  of  available  tonnage.  It  is  generally 
agreed  that  nothing  effective  could  be  accomplished  by  this  means 

To  merely  transfer  ships  from  private  to  public  ownership 
would  accomplish  nothing.  The  only  other  course  apparently 
open  is  to  purchase  foreign  tonnage  now  interned  as  the  result 
of  the  war.  It  is  of  course  open  to  question  whether  this  could 
be  accomplished  without  serious  complications.  Even  if  we 
persisted  in  our  right  to  make  such  purchase  it  would  be  entirely 
possible  for  any  offended  nation  to  retaliate  in  a  manner  which 
would  affect  our  foreign  trade  much  more  seriously  than  any 
real  or  imaginary  lack  of  tonnage.  It  would  therefore  seem  that 
the  opportunity  of  materially  changing  the  economic  situation  by 
increasing  tonnage  is  quite  impracticable.  If  such  an  outcome 
were  seriously  contemplated  by  the  authors  of  the  bill  the  initial 
capitalization  proposed  is  nothing  short  of  absurd.  The  results 
that  could  be  produced  within  the  limits  contemplated  would  be 
insignificant.  So  far  as  the  difficulty  arises  from  shortage  of 
tonnage,  the  only  really  practical  suggestion  in  the  bill  is  to 
release  any  unnecessary  tonnage  now  utilized  for  auxiliary  naval 
purposes.  This  could  be  readily  accomplished  without  resorting 
to  the  doubtful  machinery  of  the  proposed  bill.  Let  any  such 
ships  be  chartered  directly  to  such  private  agencies  as  may  re- 
quire their  use. 

If  the  reduction  of  freight  rates  is  seriously  contemplated  in 
the  proposed  measure  this  could  be  much  more  effectively  ac- 
complished by  more  direct  means,  two  or  three  of  which  may  be 
suggested.  First,  the  control  of  rates  might  be  vested  with  the 
Interstate  Commerce  Commission  as  proposed  in  the  recent  re- 
port of  the  Committee  on  Interoceanic  Canals  of  the  United 
States  Senate  and  in  the  majority  report  on  this  bill  in  the  House 
of  Representatives.  A  less  mandatory  means  might  be  found  in 
chartering  public  vessels  to  private  concerns  with  restrictions  on 
freight  charges.  It  has  been  suggested  that  if  the  government 


I58  SELECTED   ARTICLES 

wished  to  lend  financial  aid  without  resorting  to  direct  or  indirect 
subsidies,  a  provision  might  be  made  to  loan  at  a  small  rate  of 
interest,  say  3  or  4  per  cent,  an  amount  etiual  to  not  more  than 
50  to  60  per  cent  of  the  cost  of  the  ship.  This  advance  would 
of  course  be  adequately  secured  by  first  mortgage  and  suitable 
insurance.  Postal  savings  funds,  it  is  conceivable,  might  be  used 
for  this  purpose.  Under  present  conditions  the  most  serious 
handicap  so  far  as  some  of  the  more  important  European  ports 
are  concerned  is  the  excessive  cost  of  insurance.  At  any  rate 
much  simpler  and  more  direct  means  can  be  devised  to  accomplish 
the  purposes  sought  than  those  proposed  in  this  bill. 

In  so  far  as  it  is  the  purpose  of  the  bill  to  promote  trade  in 
Central  and  South  America,  it  is  again  peculiarly  ill  adapted  to 
the  purpose.  The  history  of  trade  development  clearly  indicates 
that  it  may  not  be  expected  to  follow  the  mere  opportunities  of 
transportation.  A  great  many  other  factors  enter  into  its  crea- 
tion. It  is  a  significant  fact  that  quite  a  number  of  the  more 
conspicuous  transportation  companies  have  developed  from  trad- 
ing companies  or  associations  of  merchants.  For  example,  one 
of  the  more  important  lines  trading  with  the  west  coast  of  South 
America  grew  out  of  a  concession  by  certain  South  American 
countries  for  the  production  of  and  exportation  of  nitrates. 
Having  developed  this  business  and  secured  a  market,  it  was 
quite  desirable  to  develop  an  outgoing  traffic,  resulting  eventually 
in  the  establishment  of  a  successful  line  of  merchant  vessels. 
Similarly  the  United  States  &  Australian  Steamship  Co.  is  said  to 
have  resulted  from  a  combination  of  merchants  who,  having  de- 
veloped certain  trade,  found  it  desirable  to  charter  ships  for 
transportation. 

No  doubt  other  equally  conspicuous  examples  could  be  cited 
to  show  that  merchants'  or  traders'  activities  must  precede  or  at 
least  be  intimately  associated  with  the  development  of  a  successful 
transportation  line.  New  trade  routes  are  most  apt  to  be  built 
up  with  countries  whose  resources  are  just  being  developed. 
Such  countries  usually  lack  capital,  and  not  infrequently  trans- 
portation companies  when  not  the  owner  of  the  product  must 
advance  capital  to  those  who  are  developing  natural  resources 
and  producing  merchantable  products.  It  is  said  that  the  success 
of  the  Germans  in  developing  trade  has  frequently  depended  on 
processes  of  this  sort. 


AMERICAN   MERCHANT   MARINE  159 

Can  it  have  been  contemplated  by  the  proponents  of  this  meas- 
ure that  the  United  States  would  embark  upon  trading  enter- 
prises? If  so,  the  details  of  such  a  plan  should  certainly  be 
revealed.  It  would  be  interesting  to  know  exactly  how  this  is  to 
be  accomplished.  If  such  a  course  is  not  contemplated,  then  the 
expectation  of  stimulating  our  trade  relations  by  the  provisions 
of  this  bill  would  prove  utterly  futile. 

Objections  to  Permanent  Government  Ownership   of  Ships 

Taking  up  the  alternative  supposition,  namely,  that  the  bill 
contempla.tes  a  permanent  policy  of  the  government,  inevitably 
raises  the  whole  question  of  the  expediency  of  government  own- 
ership. The  general  arguments  against  this  policy  run  with  full 
force  against  this  particular  application  of  it.  We  may  briefly 
state  the  principal  objections  to  the  general  policy  of  govern- 
ment ownership  as  follows : 

(a)  Subtraction  from  the  field  of  personal  endeavor,  (&)  de- 
struction of  individual  initiative  and  motive  for  effort,  (c)  the 
constant  tendency  to  maximum  costs,  (d)  multiplication  of  gov- 
ernment employees  and  officials,  (e)  increased  opportunity  for 
corruption,  (/)  labor  suspicion  of  the  motive  to  invent  and  im- 
prove the  facilities  of  service,  etc.,  and  in  general  it  may  be  said 
that  industries  reach  their  highest  perfection  and  greatest  effi- 
ciency when  allowed  to  develop  in  the  free  play  of  economic 
forces.  This  is  a  process  of  constant  change  and  adaptation  call- 
ing for  high  executive  ability  and  the  utmost  freedom  of  action, 
while  government  agencies  are  necessarily  sharply  limited  by  ab- 
solute law  and  tend  to  become  stereotyped,  cumbersome,  and  im- 
mobile. 

It  is,  however,  to  the  special  objections  to  the  scheme  of  gov- 
ernment ownership  proposed  in  this  bill  that  attention  is  directed. 
With  the  exception  of  those  who  favor  government  ownership  in 
whatever  form  because  it  accords  with  their  belief  in  a  socialistic 
state,  even  its  most  radical  advocates  have  limited  its  scope  to  two 
classes  of  industries,  (a)  public-service  enterprises  which  natur- 
ally tend  to  become  monopolistic  and  (6)  certain  activities  sup- 
posed to  be  closely  associated  with  the  moral  or  social  interest  of 
a  community.  Of  the  latter  class  may  be  mentioned  bathhouses 
and  lodging  houses  in  some  instances  owned  by  municipalities. 

The  essence  of  the  argument  for  public  ownership  of  certain 


160  SELECTED   ARTICLES 

public  utilities  is  that  their  highest  efficiency  and  minimum  costs 
are  attained  under  monopolistic  conditions.  With  the  element  of 
competition  removed  as  a  check  on  charges  and  deterioration  of 
service  the  necessity  of  public  control  immediately  arises.  Under 
such  conditions  the  expediency  of  public  ownership  may  be  ar- 
gued with  considerable  plausibility.  It  is  to  be  noted  that  such 
activity  is  exclusive  in  the  given  field  and  thus  eliminates  entirely 
competition  with  private  interests  and  modifies  materially  other 
difficulties,  such  as  labor  problems,  etc. 

The  experiment  in  government  ownership  as  proposed  in  this 
bill  cannot  be  justified  by  any  of  the  arguments  which  apply  to 
the  taking  over  in  its  entirety  of  a  naturally  monopolistic  public 
enterprise.  The  field  which  it  invades  is  as  far  from  naturally 
monopolistic  conditions  as  could  be  selected.  No  public  fran- 
chises are  required,  no  streets  are  occupied  or  torn  up  or  other 
public  property  laid  under  tribute,  no  special  privileges  are 
granted,  nor  uniformity  of  service  required. 

The  bill  provides  merely  a  plan  by  which  the  government  may 
become  a  competitor  in  the  shipping  business  with  private  ship- 
owners, and  at  least  for  a  considerable  time  a  comparatively 
small  competitor.  Only  one  of  two  results  could  follow:  If  the 
government  should  go  into  the  business  expecting  to  earn  a  rea- 
sonable profit,  such  as  the  minority  stockholders,  as  provided  for 
by  the  measure,  might  reasonably  anticipate,  and  should  fairly 
subject  itself  to  all  the  economic  conditions  of  the  trade  in  buying, 
maintaining,  and  operating  a  fleet  of  merchant  ships,  making 
adequate  provision  for  depreciation  and  obsolescence  and  for 
ordinary  and  the  present  extraordinary  risks  and  losses,  it  would 
not  materially  change  the  existing  status. 

If,  on  the  other  hand,  the  government  should  pursue  the  policy 
of  operating  its  boats  on  a  no-profit  basis,  it  would  of  course 
have  the  result  of  immediately  driving  private  competitors  off  any 
route  it  chose  to  invade.  It  would  also  immediately  check  or 
stop  the  investment  of  private  capital  in  the  shipping  trade.  In 
short,  instead  of  increasing  tonnage,  it  would  very  soon  reduce  it, 
eventually  doing  more  harm  than  good.  The  testimony  of  Mr. 
Huebner  before  the  Committee  on  Interoceanic  Canals  of  the 
United  States  Senate,  as  recorded  in  the  hearings  on  H.  R.  14385, 
on  pages  100  and  101,  indicates  that  such  government-owned  mer- 
chant vessels  as  already  exist,  in  order  to  promote  the  general  in- 
terest of  shippers  as  well  as  shipping,  have  been  obliged  to  enter 


AMERICAN   MERCHANT   MARINE  161 

conference  agreements  or  at  least  tacitly  concur  in  such  arrange- 
ments. 

This  by  no  means  exhausts  the  difficulties  to  be  encountered 
by  the  federal  government  in  becoming  a  competitor  in  the  ship- 
ping trade.  If  such  vessels  were  to  engage  in  foreign  trade  they 
would  almost  surely  come  in  competition  with  the  foreign-owned 
lines.  Should  they  attempt  to  establish  unprofitable  rates  in 
order  to  promote  American  trade,  it  is  easy  to  predict  that  for- 
eign governments  would  devise  retaliatory  measures  which  would 
more  than  offset  the  advantage  sought. 

One  of  the  provisions  contained  in  the  bill  for  securing  ships 
aggravates  the  dangers  of  international  complications.  Un- 
doubtedly it  was  one  of  the  inspiring  motives  for  those  who 
framed  this  bill  to  release  boats  which  have  been  interned  as  a 
result  of  the  war.  Whether  such  vessels  could  be  purchased 
without  giving  offense  is  a  delicate  question.  One  of  the  policies 
of  the  present  administration  accorded  universal  approval  is  that 
of  maintaining  the  most  circumspect  neutrality.  The  President 
has  gone  to  the  almost  unprecedented  limit  of  using  his  utmost 
endeavor  to  discourage  private  loans  to  belligerents.  It  is  con- 
sistent with  so  strict  an  application  of  the  policy  to  make,  at  least 
indirectly,  available  to  one  of  the  belligerents  many  millions  of 
dollars  which  had  been  made  unavailable  by  the  incidents  of 
war? 

Perhaps  a  still  more  perplexing  problem  would  arise  out  of 
questions  incident  to  the  status  of  government-owned  merchant 
vessels.  Determination  of  questions  of  this  sort  would  certainly 
subject  international  law  and  international  customs  to  wholly 
new  circumstances.  Would  such  boats  have  the  quality  and  be 
subject  to  the  amenities  due  to  war  vessels,  or  would  they  subject 
the  dignity  of  the  United  States  to  the  treatment  accorded  to 
privately-owned  merchant  craft  on  the  high  seas?  Undoubtedly 
the  most  disturbing  element  of  the  present  conflict  so  far  as  the 
United  States  is  concerned  is  the  attitude  taken  by  one  of  the 
belligerents  toward  the  shipping  of  neutral  nations.  This  has 
been  the  subject  of  repeated  protests  and  has  recently  caused  the 
President  to  file  with  the  government  referred  to  a  note  of  em- 
phatic disapproval. 

It  is  not  necessary  to  enumerate  in  detail  the  difficulties  to  be 
encountered.  The  right  of  search  now  maintained  would  cer- 
tainly subject  a  government-owned  vessel  to  serious  embarrass- 

13 


162  SELECTED   ARTICLES 

ment.  Even  the  fact  that  such  vessels  might  be  expected  to 
maintain  exceptional  precautions  as  to  their  cargo  and  manifests, 
yet  the  constantly  changing  character  of  contraband  goods,  beine: 
apparently  limited  only  by  the  declarations  of  belligerents,  would 
be  a  constant  source  of  uncertainty  and  irritation.  In  short, 
every  such  craft  set  afloat  would  add  one  more  risk  of  our  being 
drawn  into  the  present  war,  to  avoid  which  is  the  most  united 
and  fervent  desire  of  all  American  citizens. 


WHY  OUR  SHIPPING  HAS  DECLINED1 

The  pretence  that  our  export  business  has  suffered  because 
there  was  so  little  shipping  under  the  American  flag  will  not 
stand  a  moment's  examination  in  the  light  of  the  facts.  Even  at 
the  present  time,  when  all  trade  is  disarranged  by  the  greatest  of 
wars,  our  exports  are  enormous.  Rates  are  high  chiefly  because 
the  prices  of  wheat  and  cotton  in  Europe  are,  or  have  been,  so 
high  that  vessel  owners  have  for  once  the  chance  of  profiting 
by  the  competition  of  shippers.  The  American  farmer  who  is 
getting  nearly  twice  his  usual  price  for  wheat  must  laugh  up- 
roariously over  the  Presidential  sympathy  on  account  of  the  high 
ocean  freights.  When  cotton  was  twice  as  high  in  Bremen  as  in 
New  York,  the  shipper  could  afford  to  pay  well  for  transporta- 
tion, and  the  vessel  owner  made  him  do  it. 

Our  total  exports  exceeded  a  billion  dollars  in  1892,  and  two 
billions  in  1911,  and  approached  two  and  a  half  billions  in  1913, 
and  reached  three  and  a  half  billions  in  1915.  To  talk  of  the  re- 
striction of  our  exports  because  they  go  abroad  chiefly  under  for- 
eign flags  is  to  trifle  with  ordinary  intelligence.  Vessels  are  in 
all  our  ports  hunting  for  cargoes  for  everywhere.  More  non- 
sense has  been  uttered  about  our  South  American  trade  than  on 
any  other  subject  except  paper  money.  One  of  the  commonest 
follies  is  to  say  that  our  exports  have  to  go  to  South  America 
by  way  of  Europe.  If  it  were  true,  it  would  not  involve  a  much 
more  circuitous  route  than  nature  decrees.  There  are  statesmen 
and  business  men  who  suppose  that  if  a  steamer  from  New  York 
wished  to  reach  Buenos  Aires,  it  would  steer  due  south  if  it 

1  Unpopular  Review.     5:306-17.     April,    1016. 


AMERICAN   MERCHANT   MARINE  163 

could.  That  would  carry  it  to  the  Pacific  ocean,  far  west  of 
Valparaiso.  There  is  only  a  small  fragment  of  South  America 
that  does  not  lie  east  of  New  York.  An  official  of  the  Depart- 
ment of  State  has  lately  returned  from  South  America  with  the 
information  that  the  extension  of  our  trade  in  that  region  de- 
mands American  steamers  and  the  education  of  our  bankers. 
The  proposition  that  our  government  officials  should  educate  our 
bankers  is  extremely  humorous. 

How  valuable  the  testimony  of  this  official  is  may  be  es- 
timated from  the  fact  that  he  confessed : 

"I  went  there  under  the  impression  that  our  goods  were  unknown, 
and  that  it  would  require  considerable  work  to  introduce  them.  I  dis- 
covered that  our  goods  are  used  and  liked  all  over  the  land,  and  the  people 
of  those  countries  are  wondering  why  we  do  not  sell  them  direct  instead 
of  sending  them  by  way  of  London." 

Here  is  a  part  of  the  world  to  which  our  exports  increased 
in  value  from  $41,000,000  in  1903  to  $146,000,000  in  1913,  and 
they  are  now  running  at  the  rate  of  $170,000,000,  and  this  State 
Department  official  went  there  supposing  our  merchandise  was 
unknown.  As  to  his  notion  that  our  exports  go  by  way  of  Lon- 
don, we  have  the  fact  that  in  the  fiscal  year  1913,  969  vessels  with 
cargoes  and  59  in  ballast  cleared  from  the  ports  of  the  United 
States  for  the  ports  of  South  America,  and  in  1910  Commercial 
Agent  J.  D.-Whelpley  reported  regarding  Argentina: 

It  will  be  seen  from  these  figures  that  there  is  no  lack  of  shipping 
facilities  for  cargo  from  New  York  to  the  River  Plate,  nor  is  there  com- 
plaint to  that  effect  from  shippers.  The  days  when  it  was  necessary 
to  ship  goods  to  Argentina  by  way  of  Europe  have  passed. 

That  there  is  ample  supply  of  shipping — at  least  for  South 
America — is  certified  to  not  only  by  the  commercial  report  above 
quoted,  but  by  a  report  of  a  committee  of  the  National  Associa- 
tin  of  Manufacturers  who  toured  South  America  in  1896,  by  a 
commercial  agent  in  Brazil  in  1905,  and  as  to  the  port  of  Car- 
tagena by  a  consular  report  as  recent  as  December  1914.  So, 
too,  we  have  abundant  testimony  from  the  same  and  other  docu- 
ments that  freight  rates  from  our  ports  are  not  higher  than  those 
from  European  ports,  and  are  frequently  lower.  The  discrimina- 
tions against  our  trade  by  foreign  shipping,  which  cornes  to  our 
ports  seeking  cargoes,  is  a  fiction  of  the  subsidy  hunters,  used  by 
men  who  have  opposed  government  aid  to  shipping  all  their 
lives,  and  have  now  made  a  right-about-face  merely  because  the 


164  SELECTED   ARTICLES. 

President  has  ordered  it.  It  is  absurd  upon  its  face,  and  the 
consular  reports  and  shipping  news  contain  evidence  that  rate 
wars  between  English  steamship  lines  have  for  considerable 
periods  given  us  lower  rates  to  South  Africa  and  Australia  than 
English  shippers  enjoyed. 

Shouters  for  the  "old  flag,  and  an  appropriation"  repeated  for 
a  long  time  the  guess  of  somebody,  somewhere,  that  we  paid 
foreign  vessel  owners  $200,000,000  a  year.  If  they  do  the  work 
for  us  cheaper  than  we  can  do  it  ourselves,  there  is  no  great 
significance  in  the  sum  paid.  But  the  figures  were  wild  guess- 
work. As  they  had  been  in  use  for  some  time,  and  the  country 
is  growing,  it  has  lately  been  more  fashionable  to  say  $300,000,000. 
A  United  States  Senator  who  aspires  to  be  nominated  as  the 
business  man's  candidate  for  President  has  used  this  larger  figure 
as  the  amount  paid  on  imports  and  exports.  Why  a  business 
man's  statesman  should  suppose  that  we  pay  the  freight  both 
ways,  and  the  foreigner  pays  it  neither  way,  may  be  left  for  the 
contemplation  of  those  who  have  time  for  that  sort  of  thing. 
Recently  the  subsidists  and  those  affiliated  with  them  have  thrown 
another  $100,000,000  to  foreign  vessel  owners  and  are  mentioning 
$400,000,000  as  our  annual  freight  bill. 

Twenty  years  ago  The  New  York  Journal  of  Commerce  made 
an  investigation  of  the  subject  and  found  that  the  average  freight 
charge  was  3.6  per  cent  of  the  value  of  the  merchandise.  Last 
December  the  National  Foreign  Trade  Council  issued  a  compre- 
hensive report  on  Ocean  Shipping,  prepared  by  a  committee  of 
three  persons,  two  of  whom  were  shipping  men  of  great  experi- 
ence. This  report  quoted  the  estimate  of  Sir  George  Paish,  for 
1908-9,  that  the  freight  charge  on  our  imports  was  between  2^2 
and  3  per  cent  of  the  value  of  the  merchandise.  The  committee 
put  the  present  rate,  war  conditions  omitted,  much  lower.  "The 
true  proportion  of  freight  charges  to  trade  value,  in  the  opinion 
of  freight  experts,  does  not,  in  time  of  peace,  exceed  one-third  of 
i  per  cent  on  expensive  and  valuable  goods,  such  as  are  im- 
ported into  this  country  from  Europe  by  the  passenger  liners, 
and  it  does  not  exceed  3  per  cent  on  cheap  commodities."  But 
at  the  maximum  of  3  per  cent,  "admittedly  high,  the  total  freight 
bill  on  imports  did  not  exceed  $52,131,259  in  the  fiscal  year  1914, 
of  which  about  $5,213,125  was  the  share  of  American  ships,  and 
$46,818,134  the  portion  of  foreign  vessels.  .  .  .  Part  of  the 
money  paid  out  to  foreign  ship  owners  in  freight  rates  never 


AMERICAN   MERCHANT   MARINE  165 

leaves  this  country  because  much  of  the  investment  of  foreign 
shipping  lines  is  placed  on  this  side  in  terminals,  etc."  Wages, 
coal,  provisions  and  repairs  are  paid  for  here. 

Attached  to  last  year's  Congressional  report  on  the  govern- 
ment-shipping bill  is  a  memorandum  representing  the  shipping 
trade  as  exceptionally  profitable,  and  dividends  of  20,  30  and 
even  40  per  cent  are  indicated  as  normal.  If  this  were  true, 
American  capital's  aversion  to  water  would  be  incomprehensible. 
There  is  overwhelming  refutation  of  it  easily  to  be  obtained. 
Fairplay,  a  leading  English  marine  journal,  tabulated  the  steam- 
ship reports  made  in  1914,  showing  that  twenty-five  companies 
operating  passenger  and  cargo  steamers  of  5,106,495  tons  paid 
average  dividends  of  8.26  per  cent.  Eighty-seven  companies  op- 
erating cargo  steamers  alone,  with  2,067,403  tons'  capacity,  paid 
an  average  of  10.38  per  cent.  But  1914  was  a  phenomenal  year. 
Fairplay  gives  the  financial  results  of  the  latter  companies  for 
eleven  years,  1904  to  1914.  They  had  eight  poor  years,  in  only 
two  of  which  did  the  dividends  exceed  4  per  cent.  Then  came 
three  remarkably  good  years,  1912,  1913,  and  1914.  In  those  three 
years  the  profits  were  more  than  60  per  cent  greater  than  in  the 
previous  eight.  Dividends  were  6.82,  12.56  and  10.38  per  cent, 
and  large  sums  were  set  off  for  depreciation,  which  had  not  been 
possible  in  the  earlier  eight  years.  But  with  these  three  fat 
years  included,  the  average  dividends  for  the  eleven  years  were 
5-37  per  cent,  and  Fairplay  remarks  that  "Owing  to  the  losses 
which  shareholders  have  experienced  with  shipping,  few  shipping 
companies'  shares  are  quoted  above  par." 

The  United  States  and  Great  Britain  have  developed  the 
means  of  transportation  most  essential  to  their  respective  com- 
mercial and  political  interests.  Great  Britain,  with  a  small  home 
domain,  and  dependencies  scattered  all  over  the  world,  can  hold 
its  empire  together  only  by  abundant  shipping  facilities,  and  has 
taken  the  first  place  as  a  maritime  power.  The  United  States, 
with  a  vast  continental  and  contiguous  area,  could  preserve  itself 
from  disintegration  only  by  binding  all  its  parts  together  with 
railroads,  and  it  has  surpassed  all  other  nations  in  its  develop- 
ment of  land  transportation. 

We  are  getting  our  sea  transportation  done  for  us  cheaper 
than  we  could  do  it  ourselves,  by  people  who  go  to  sea  because 
there  is  no  room  for  them  on  land.  Our  commerce  has  grown 
rapidly  in  every  direction,  and  the  American  who  blushes  for 


156  SELECTED   ARTICLES 

shame  because  the  American  flag  is  so  seldom  seen  in  foreign 
ports  is  as  foolish  as  an  Englishman  who  should  feel  humiliated 
at  the  petty  railway  mileage  of  his  own  country. 


THE  OPPOSITION  AND  THE  SHIPPING  BILL1 

Ten  boats  leave  every  month  on  the  average  from  New  York 
for  Rio  Janiero  on  the  east  coast  of  South  America.  What  are 
the  facts?  Before  and  since  the  war  they  have  been  running 
with  a  surplus  of  cargo  space,  sometimes  being  only  half  filled. 
A  few  weeks  ago  a  passenger  boat  fit  to  engage  in  the  trans- 
Atlantic  trade,  came  in  from  Rio  with  six  first-class  passengers 
and  seventeen  third-class  passengers,  and  that  was  the  whole  pas- 
senger list.  On  the  west  coast  of  South  America,  notwithstand- 
ing the  stimulus  afforded  by  the  opening  of  the  Panama  Canal, 
the  Peruvian  and  the  Chilean  Navigation  companies,  which 
jointly  ran  boats  weekly,  have  withdrawn  the  weekly  service  and 
made  it  fortnightly.  I  trust  that  the  old  condition  is  soon  to  be 
restored. 

Here  I  want  to  call  attention  to  one  phase  of  this  whole 
freight  situation.  While  there  may  be  sporadic  instances  of  high 
rates  to  those  portions  of  the  world  that  are  at  peace,  there  has 
not  been  a  rise  in  the  charges  so  great  as  that  which  has  fre- 
quently happened  in  the  times  of  profound  peace.  Generally 
speaking,  the  rates  to  South  America,  to  South  Africa,  to  India 
and  to  Hong  Kong  have  been  raised  about  25  per  cent.  In 
sporadic  instances  rates  in  the  war  zone  have  been  raised  eight 
or  nine  times.  Thus  the  disparity  in  the  increases  is  the  sub- 
stance of  the  whole  matter,  and  shows  conclusively  that  the  in- 
creases are  in  direct  proportion  to  the  dangers  of  war. 

Will  the  conditions  of  European  trade  be  relieved  by  in- 
creased shipping?  Do  not  let  us  deal  with  generalities.  Let  us 
get  down  to  the  facts.  What  is  it  that  has  caused  this  decrease  in 
the  supply  of  shipping  and  an  increase  in  freight  rates?  In  the 
first  place  German  and  Austrian  shipping  is  withdrawn  from 
the  seas.  Those  boats  probably  carried  about  14  per  cent  of  the 

1  Address  of  Hon.  Theodore  E.  Burton.  Senator  from  Ohio,  before 
the  Chamber  of  Commerce  of  the  United  States,  at  Washington,  D.  C., 
February  4,  1915. 


AMERICAN   MERCHANT   MARINE  167 

foreign  trade.  But  let  us  consider  that  for  a  moment.  If  Ger- 
man and  Austrian  shipping  is  withdrawn  from,  the  seas  so  also 
are  Germany  and  Austria  shut  off  from  the  trade  of  the  world. 
The  Baltic  Sea  is  practically  closed  to  trade ;  so  also  is  the  Black 
Sea.  And,  roughly  approximating  an  estimate,  we  may  say  that 
the  trade  of  the  world  has  decreased  because  of  the  war  in  just 
about  a  like  proportion  with  the  loss  of  shipping.  The  situation 
would  naturally  call  for  an  increase  of  our  exports — more  food 
and  more  supplies.  More  food  and  more  supplies  are  destroyed 
when  war  is  in  progress.  This  tendency  is  emphasized  by  the 
desire  of  the  nations,  as  Italy  and  Sweden  and  Norway,  near  to 
the  theatre  of  war,  but  not  engaged  in  the  conflict,  to  prepare 
themselves  for  all  exigencies.  That  has  increased  the  measure  of 
their  purchases.  All  factors  considered,  the  withdrawal  of  this 
German  shipping,  is  no  doubt  a  factor  in  the  increase  of  freight 
rates. 

War  Risk  Insurance 

Another  factor  of  great  importance  is  the  liability  of  boats  to 
search  and  seizure.  Still  more  important  is  the  cost  of  war  risk 
insurance.  Even  if  it  be  only  2  or  3  per  cent  for  a  voyage,  just 
think  what  that  means.  Suppose  there  are  half  a  dozen  voyages 
in  the  year.  Twelve  or  18  per  cent  must  be  paid  for  war  risk  in- 
surance. That  would  be  far  away  beyond  the  ordinary  income  on 
investments  of  capital.  Another  reason  is  the  dangerous  channels 
through  which  shipping  may  go.  If  there  is  any  one  thing  that 
the  mariner  fears  more  than  others  it  is  a  hidden  obstruction. 
He  fears  that  his  boat  may  run  upon  the  rocks.  But  infinitely 
more  dangerous  is  the  mine  which,  when  it  explodes,  not  only 
stops  the  vessel  and  blows  up  the  hull,  but  perhaps  carries  cap- 
tain and  crew  and  all  into  Kingdom  Come.  Then  there  is 
another  reason.  The  requisition,  especially  by  Great  Britain,  of 
a  good  share  of  its  shipping  to  be  used  for  military  purposes. 

But  when  I  name  all  these  I  have  not  named  that  which  is  at 
present  the  most  decisive  in  the  situation ;  that  is,  the  delay  in 
foreign  ports. 

Foreign  Ports  Congested 

As  a  man  said  a  few  days  ago — and  I  am  not  sure  but  that 
he  was  pretty  nearly  right — more  ships  would  add  to  the  con- 
gestion, for  they  would  be  in  each  other's  way  in  foreign  ports. 


168  SELECTED   ARTICLES 

Let  me  give  you  a  few  illustrations.  Not  very  long  ago  an 
American  boat  was  chartered  to  carry  horses  to  a  port  in  France. 
It  had  additional  cargo  capacity  of  8,000  tons,  dead  weight,  but 
the  owners  learned  that  in  the  port  to  which  they  were  going 
there  had  been  a  delay  of  sixty  days  in  loading  and  unloading. 
What  did  they  do?  They  went  from  this  country  to  France 
without  filling  a  foot  of  the  space,  rather  than  to  take  the  risk 
of  delay  and  detention.  Delay  and  detention  are  not  limited  to 
the  ports  of  countries  at  war.  It  is  just  as  bad  at  Genoa  as  any- 
where, where  a  few  days  ago  thirty  ships  were  waiting  in  vain 
to  be  unloaded.  It  is  a  marked  factor  at  Liverpool  and  at  Lon- 
don ;  perhaps  not  so  large  in  the  German  ports,  if  you  can  reach 
them,  but  generally  in  all  European  ports,  and  the  cause  of  it  is 
perfectly  obvious.  Government  ships  and  other  ships  gather  in 
the  harbor.  The  government  claims  for  its  military  purpose  the 
first  use  of  the  quays  and  docks.  The  men  who  would  be  engaged 
in  loading  and  unloading  have  gone  to  the  war.  The  men  who 
would  be  making  necessary  repairs  have  gone  to  the  war,  and 
thus  it  is  necessary  to  wait  twenty  or  thirty  or  forty  or  sixty 
days  before  a  boat  can  be  unloaded. 

On  this  subject  I  want  to  read  very  briefly  from  a  report  by 
Norman  Hill  made  on  the  I2th  of  January  last.  I  think  there 
is  no  one  who  is  a  higher  authority  in  England  in  regard  to  ship- 
ping. He  says: 

There  is  nothing  in  any  of  the  above  figures  to  account  for  the 
congestion  of  the  ports  in  which  fewer  vessels  have  been  available, 
and  there  has  probably  been  as  great  a  fall  in  the  volume  of  the  trade 
carried.  The  tonnage  remaining  available  has  been  sufficient  to  carry  the 
cargoes  offering,  for  cargoes  have  not  had  to  be  shut  out;  although  in 
the  trade  of  the  United  Kingdom  the  amount  carried  in  each  of  our 
ships  has  not  substantially  increased  the  time  employed  in  the  discharge 
has  increased  most  seriously.  In  London  and  Liverpool  vessels  have  to 
wait  for  days  for  discharging  berths,  and  when  they  can  obtain  berths 
the  discharge  is  hampered  and  delayed  by  the  block  on  the  quays  and  on 
the  railways.  It  is  clear,  therefore,  that  the  causes  of  the  congestion  must 
be  other  than  the  one  of  ships  or  the  one  of  quay  space.  The  main 
cause  is  beyond  question  the  shortage  of  labor. 

And  that  applies  in  an  even  greater  degree  in  the  countries 
more  affected  by  the  war  than  Great  Britain  where  in  a  degree 
industrial  and  commercial  activities  have  gone  on  as  heretofore. 

Where  are  you  going  to  get  your  ships?  My  good  friend  Mr. 
Baker,  who  has  been  quoted  by  the  distinguished  Secretary  of 
the  Treasury,  says  that  there  are  not  more  than  ten  ships  avail- 


AMERICAN   MERCHANT   MARINE  169 

able  under  neutral  flags  that  would  be  suitable  for  the  purpose, 
and  he  advises  the  building  of  ships.  Well,  it  is  a  "present 
emergency"  that  is  on  us.  We  all  fervently  hope  that  this  war 
will  close  in  a  less  time  than  ships  could  be  built.  Strangely, 
most  of  our  shipyards  are  busy  already,  and  it  would  be  ten  to 
sixteen  months  before  a  boat  of  any  considerable  size,  suitable 
for  the  trans-Atlantic  trade,  could  be  built  in  one  of  our  ship- 
yards. In  the  meantime  you  have  those  ten  ships.  What  are 
you  going  to  do  with  them?  How  much  will  they  help  you? 
What  better  would  the  government  do  with  those  ten  ships  than 
the  private  owners  are  doing?  Is  the  government,  which  we 
must  concede  is  sometimes  very  unwieldly,  going  to  manage  the 
shipping  business  better  than  the  private  owners? 

Government  Ownership 

There  are  three  phases  of  government  ownership  presented 
in  this  proposal.  I  am  not  one  of  those  for  whom  government 
ownership  has  the  terror  that  it  has  for  many.  Under  proper 
restrictions  it  does  not  frighten  me.  But  what  is  the  proper  field 
for  government  ownership?  It  is  in  some  branch  of  public  ser- 
vice monopolistic  in  its  nature,  like  waterworks  in  the  city,  elec- 
tric light  or  gas  plants — possibly  telephone  service  and  street 
railways,  or  those  activities  that  are  in  close  association  with  the 
moral  and  social  conditions  of  a  posing  partial  government  own- 
ership, though  there  is  nothing  more  disastrous  than  to  have  part 
government  and  part  private  ownership.  This  is  not  a  fair  test 
of  government  ownership  and  operation.  The  ships  that  could 
be  purchased  with  forty  millions  would  be  a  mere  bagatelle  in 
the  shipping  of  the  world.  You  would  be  at  best,  even  if  it 
were  half,  in  about  the  same  condition  that  you  are  in  when 
there  are  two  telephone  lines  in  the  city.  Oh,  I  have  been 
through  that !  I  have  heard  the  statement  made,  "You  have  one 
telephone  line  here.  If  you  put  in  another  you  will  have  the 
benefit  of  competition."  What  was  the  result?  Each  telephone 
line  has  to  wire  every  building,  put  separate  conduits  in  every 
street,  and  each  office  must  have  two  'phones.  There  is  incon- 
venience all  along  the  line,  and  finally,  either  there  will  be  in- 
sufficient service,  or  the  public  will  have  to  pay  interest  on  both 
equipments. 

I  remember  some  thirty  years  ago  that  there  was  a  new  rail- 
road projected  paralleling  the  Lake  Shore  Railroad  between 


i7o  SELECTED  ARTICLES 

Buffalo  and  Cleveland.  You  could  flip  a  copper  between  the 
different  tracks,  much  of  the  way.  The  right-of-way  man  went 
out  and  said,  "Now,  farmer,  we  are  going  to  have  a  competing 
line  here.  You  can  go  to  town  more  cheaply ;  you  can  ship  your 
produce  more  cheaply ;  you  will  have  all  the  blessings  of  competi- 
tion and  a  new  avenue  to  happiness  will  be  opened  to  you."  In 
about  three  years  they  were  both  under  the  same  management. 
It  proved  impossible  to  run  the  two  side  by  side  under  the  laws 
of  competition. 

What  are  you  going  to  do  if  you  have  only  one  fourteenth  or 
one  twentieth  of  the  shipping  of  the  world?  In  the  first  place, 
the  question  has  been  asked,  have  you  any  special  route  on  which 
you  will  put  these  boats  ?  And  the  answer  is  made,  "No ;  we  will 
cross  that  bridge  when  we  come  to  it."  I  think  that  question 
ought  to  be  answered.  I  do  not  think  Congress  should  be  asked 
to  appropriate  f.orty  or  fifty  millions  of  dollars  without  knowing 
something  about  what  is  to  be  done  with  the  money. 

Ports  of  Call 

Will  special  ports  be  selected?  Then  what  happens?  If  you 
choose  Galveston,  will  not  Mobile  and  New  Orleans  have  occasion 
to  complain?  Will  you  choose  a  special  product,  such  as  wheat 
or  cotton,  then  will  not  every  other  class  of  producers  have  a 
right  to  complain  that  you  are  giving  a  special  advantage  to  this 
line  of  business  to  the  disadvantage  of  every  other.  Suppose  the 
government  carries  at  lower  freight  rates  than  private  owners. 
What  would  be  the  result?  Why,  perhaps  one  twentieth  of  the 
traffic  of  this  country— a  fraction  certainly  not  greater  than  one- 
tenth,  would  be  carried  at  a  lower  rate.  What  is  the  result? 
Does  the  great  body  of  the  American  people  get  the  benefit  of 
it?  No.  It  is  the  few  who  are  benefited  by  those  rates.  It  is 
exactly  like  the  days  of  railroad  wars,  when  the  railroads,  in 
times  of  sharp  competition,  put  down  their  rates  to  a  low  figure. 
Those  who  were  on  the  ground  floor  and  took  advantage  of  it 
were  able  to  get  their  stuff  carried  at  low  figures,  and  they  put 
the  benefits  in  their  pockets.  The  consumer  got  no  benefit  from 
it.  You  cannot  go  into  this  business  partially  and  make  a  success 
of  it.  If  you  are  going  into  government  ownership  it  is  necessary 
that  you  shall  control  the  whole  business.  There  is  no  middle 
ground. 

I  recognize  a  disposition  on  the  part  of  many  of  the  American 
people  to  disparage  expert  knowledge.  It  is  thought  that  inex- 


AMERICAN   MERCHANT   MARINE  171 

perienced  men  may  gather  around  a  table  and  smoke  cigars  and 
make  plans  and  advise  organizations  for  trade  or  industry  just 
as  well  as  those  who  have  given  their  lives  to  it.  A  distinguished 
public  man  went  out  to  Trenton  not  long  ago,  to  address  a  high 
school,  and  he  said  that  the  youth  who  has  written  a  bright  epi- 
gram gains  more  eclat  than  the  student  who  has  studied  for  two 
years.  I  want  to  say  a  few  words  for  the  student  that  studies 
for  two  years  and  who  masters  the  subject.  It  appears  some- 
times to  be  imagined  that  great  inventions  and  discoveries  are  the 
result  of  a  chance  inspiration;  that  a  man,  peering  out  into  the 
outer  void,  puts  his  hand  out  and  brings  in  a  telephone  or  an 
electric  light.  But,  ladies  and  gentlemen,  that  is  not  the  case. 
The  rewards  in  business  and  in  science  come  to  those  who  labor 
and  who  acquire  qualifications. 

Shipping  Trade  Necessities 

Thus  the  shipping  trade  has  been  developing  for  centuries. 
It  has  adopted  new  routes  of  trade ;  it  has  adopted  new  methods, 
it  has  preceded  rather  than  followed  demands.  There  are  cer- 
tain necessities  in  regard  to  it.  There  must  be  terminals  for  the 
loading  and  discharge  of  freight.  It  is  not  sufficient  to  have 
ships.  There  must  be  wharves  and  quays.  Is  the  government 
going  to  secure  those  also?  There  must  be  affiliations  with  ship- 
pers. Is  the  government  going  to  secure  such  in  a  month  or  in 
two  months?  There  must  be  a  familiarity  with  the  routes  of 
commerce ;  a  most  careful  calculation  must  be  made  so  that  the 
ship  will  have  not  only  an  outgoing  but  a  return  cargo ;  that  she 
shall  have  something  to  do  the  year  around. 

And  then  again  oftentimes  the  owner  of  the  ship  is  a  mer- 
chant. He  has  a  cargo  one  way  supplied  by  some  shipper.  He 
buys  something  to  bring  back.  That  is  in  a  considerable  degree 
true  of  the  trade  on  the  west  coast  of  South  America,  where 
nitrates  constitute  the  return  cargo.  Is  the  government  going  into 
that  business  and  going  to  buy  merchandise  to  carry  at  this  time? 

I  must  say  that  in  whatever  phase  we  consider  this  bill  we 
meet  with  difficulties.  Not  only  is  partial  government  ownership 
defective  in  any  field,  but  this  is  a  line  of  business  which  it  would 
be  particularly  dangerous  for  a  newcomer  to  enter  under  the  most 
favorable  circumstances. 

The  Revenue  Cutter  Service,  referred  to  by  the  distinguished 
Secretary,  I  commend  very  much,  but  it  discharges  a  purely  gov- 
ernmental function  in  the  first  place  and  to  that  has  been  added 


172  SELECTED  ARTICLES 

the  most  commendable  object  of  saving  life.  But  that  was  not 
a  creation  overnight.  That  was  not  adopted  under  a  bill  never 
declared  for  in  a  party  platform.  It  is  the  growth  of  a  hundred 
years.  I  read  a  report  by  one  of  the  Cabinet  officers  a  few  days 
ago  about  the  frightfully  dilapidated  condition  of  the  boats  in 
one  branch  of  the  government  service,  and  I  thought,  "Is  it  possi- 
ble that  alongside  such  a  condition  as  this  under  government 
management  we  are  going  to  be  asked  that  the  government  go 
into  the  shipping  business  on  a  large  scale?"  If  the  govern- 
ment cannot  manage  boats  that  are  used  for  its  own  agencies, 
how  is  it  going  to  manage  them  when  they  are  used  for  the 
general  purposes  of  trade? 

Purchase  of  Belligerent  Ships 

There  is  one  question  I  must  consider  before  I  close ;  Are  you 
going  to  buy  ships  of  any  of  the  belligerent  nations?  It  would 
take  too  long  for  me  to  go  into  this  question  in  detail,  but  I  wish 
to  state  the  situation  briefly :  Formerly  England  maintained  the 
idea  that  a  neutral  could  buy  the  ship  of  a  belligerent  in  time  of 
war  if  it  was  done  in  good  faith.  The  doctrine  on  the  Continent 
of  Europe  was  always  the  contrary;  that  a  purchase  by  a  neutral 
of  a  belligerent  ship  in  time  of  war  was  void,  and  that  if  she 
sailed  with  the  neutral  flag  she  could  be  seized,  taken  into  the 
prize  court  and  condemned.  In  the  declaration  of  London,  form- 
ulated by  a  convention  in  London  in  1909,  all  the  commercial  na- 
tions, practically,  agreed  with  the  Continental  doctrine ;  that  is,  a 
transfer  before  the  beginning  of  war  was  valid  if  made  in  good 
faith,  but  if  made  after  war  had  commenced,  it  was  void  unless 
it  was  shown  that  it  was  not  done  to  evade  the  consequences  of 
war.  Suppose  there  is  a  merchant  ship  of  Germany  or  England 
in  the  harbor  of  Charleston  or  Galveston.  What  are  the  "con- 
sequences" to  which  such  a  boat  is  exposed?  Why,  if  it  sailed 
out  under  the  German  or  English  flag  it  would  be  seized  by  the 
other  of  the  belligerents.  If  transferred  to  the  American  flag,  it 
would  be  to  evade  the  consequences  of  war,  and  the  boat  would 
still  be  subject  to  seizure. 

This  war  is  not  going  to  last  always.  We  must  take  into  ac- 
count the  feeling  of  these  foreign  nations  toward  us  when  the 
war  has  finished.  I  am  afraid  we  have  been  a  little  too  commer- 
cial in  many  of  our  ideals. 

Germany  has  issued  a  statement  confirming  the  declaration  of 


AMERICAN   MERCHANT   MARINE  173 

London.  It  is  true  she  has  intimated  that  she  might  waive  her 
objections  to  the  sale  of  certain  boats  detained  in  our  harbors  if 
the  boats  sail  exclusively  to  German  ports,  and  saying  that  such 
boats  must  have  a  passport  issued  by  the  German  Consul  and  that 
it  must  be  taken  to  the  State  Department  for  approval,  and  then, 
it  is  good  for  only  one  trip.  England  and  France  have  also  pro- 
claimed the  declaration  of  London,  with  some  modification  as 
their  policy  during  the  war. 

Our  National  Rights 

With  these  belligerents  all  united  in  the  idea  that  ships  can- 
not be  transferred  under  these  circumstances,  I  want  to  say  that 
we  cannot  afford  to  take  the  chance.  I  am  not  one  of  those  who 
say  with  bluff  old  Commodore  Hull  "My  country :  May  she  be  al- 
ways in  the  right,  but,  right  or  wrong,  my  country."  I  cannot 
agree  with  the  last  clause.  No  nation  has  insisted  upon  the 
rights  of  belligerents  more  earnestly  than  we  did  in  the  Civil 
War.  We  took  it  upon  ourselves  to  determine  the  ultimate  des- 
tination of  cargoes.  That  is,  if  a  boat  sailed  for  Nassau  and  her 
cargo  was  suspiciously  large  we  reserved  the  right  to  investigate 
the  question  as  to  whether  the  goods  were  not  intended  to  run  the 
blockade.  If  a  boat  went  to  Matamoras,  even  though  Mexico 
was  at  war  and  the  owners  said,  "This  may  be  intended  for 
Mexico,"  our  prize  court  said  "No ;  the  chances  are  that  it  is  in- 
tended for  our  enemies,  and  we  will  confiscate  your  boat  and  its 
cargo." 

We  cannot  afford  to  take  the  chance  of  trouble  in  buying 
belligerent  ships.  Thus  we  are  driven  back  on  the  ten  ships  that 
are  available. 

Object  of  Bill 

This  bill,  should  it  facilitate  export,  would  certainly  raise 
prices.  I  have  heard  in  a  political  campaign  that  it  was  a  requis- 
ite of  usefulness  that  men  should  go  their  round  with  different 
speeches  in  their  pockets.  One  for  use  when  they  went  among 
the  farmers,  telling  them,  "You  are  going  to  have  higher  prices 
and  everything  is  going  to  go  better  if  you  put  us  into  office;" 
and  then  they  would  go  into  cities  and  say,  "You  are  paying  too 
much  for  bread  and  the  prices  are  going  to  be  lower." 

Now,  what  is  the  object  of  this  bill?  Is  it  to  raise  prices? 
Why,  wheat  is  quoted  at  a  figure  higher  than  it  has  been,  save  in 


174  SELECTED   ARTICLES 

some  sudden  rushes  in  the  market,  since  the  year  1866.  Persons 
are  coming  here  to  Washington  asking  that  an  embargo  be  placed 
en  the  export  of  wheat  and  wheat  products.  There  was  a  head- 
line in  one  of  the  papers  night  before  last  that  said  the  cost  to 
the  Capital  City  alone  would  be  $600,000,  because  of  the  added 
price  of  wheat.  It  has  got  to  be  either  a  smaller  loaf  or  a 
higher  price.  The  government  ought  at  least  to  be  neutral  under 
those  circumstances.  Is  it  going  to  use  its  strong  hand?  Is  it 
going  to  tax  the  people,  consumer  and  producer  alike,  to  facili- 
tate the  export  of  wheat  and  hence  raise  the  price  of  our  primary 
food  product? 

Now,  let  us  look  into  that  cotton  situation  for  a  minute. 
We  have  an  unprecedented  crop  this  year,  16,000,000  bales.  Very 
early  in  this  war  the  Liverpool  cotton  exchange  passed  a  resolu- 
tion that  they  would  not  buy  any  cotton  at  present;  the  sources 
of  demand  were  shut  off;  the  cotton  textile  industry  is  demoral- 
ized by  the  war.  There  is  consequently  a  very  much  diminished 
demand.  Is  it  not  perfectly  inevitable  that  the  price  should  be 
lowered  under  those  circumstances,  namely  the  large  crop  and 
the  diminished  demand  abroad?  In  this  terrible  war  the  con- 
sumer pays  the  freight  as  he  never  did  before.  If  wheat  were 
available  from  Odessa,  if  it  were  available  from  Siberia,  if  it 
were  available  from  India,  there  would  be  competition,  but,  as  it 
is  now,  the  main  source  of  supply  is  the  New  World.  You  can 
fix  the  price  in  Chicago  or  in  Buenos  Aires  and  add  on  the 
freight  and  the  consumer  abroad  has  got  to  pay  that  freight.  In 
Bremen  the  cost  of  cotton  is  19  cents.  Why  is  it  so?  Because 
of  the  high  rate  of  freight  between  Galveston  or  Savannah  or 
New  Orleans,  and  the  danger  of  capture,  the  danger  of  detention, 
and  the  danger  of  being  blown  into  eternity  by  mines  when  you 
are  on  the  way. 

Consideration  for  the  Consumer 

Why,  it  was  rather  understood  when  this  new  regime  com- 
menced that  we  were  to  have  lower  prices.  That  was  one  of  the 
promises  that  was  made. 

Now,  is  it  to  be  the  sole  aim  of  governmental  activity  to  raise 
prices?  Is  not  the  consumer  entitled  to  the  considerate  attention 
of  the  administration?  Will  you  tax  the  consumer  and  the  pro- 
ducer alike  to  help  the  producer  alone?  Is  that  the  new  gov- 
ernmental idea  that  you  are  going  to  bring  into  effect? 


AMERICAN    MERCHANT   MARINE  175 

Now,  there  is  one  point  in  this  connection  that  I  would  like 
to  mention  while  speaking  in  regard  to  cotton.  The  total  pro- 
duction, as  I  said,  is  about  16,000,000  bales.  A  little  more  than  a 
third  of  that  is  retained  at  home.  The  other  two-thirds  or  less 
goes  abroad.  That  would  mean  the  export  of  about  10,400,000 
bales  in  the  year,  200,000  bales  in  a  month.  Let  us  look  at  the 
recent  shipments  of  cotton.  I  say  this  to  hold  out  a  word  of 
hope  to  those  who  are  interested  in  that  line  of  production. 
Since  January  2  there  has  not  been  a  single  week  when  the  aver- 
age export  has  not  been  above  200,000  bales.  It  is  true  that  there 
would  naturally  be  large  shipments  at  this  season  of  the  year, 
but  when  you  take  into  account  the  war,  we  are  doing  well,  and 
conditions  approximate  the  normal  when  you  send  an  average  of 
200,000  bales  per  week.  For  the  week  ending  January  2,  there 
was  sent  abroad  191,000  bales;  January  9,315,000  bales;  January 
16,  218,000  bales;  January  23,  255,000  bales,  and  January  30, 
398,166  bales.  Keep  up  that  rate  for  26  weeks  of  the  year  and  the 
whole  we  have  for  export  will  be  carried  abroad  to  a  variety  of 
ports. 

There  is  another  thing  that  some  of  you  may  have  noticed  in 
a  newspaper  paragraph  this  morning,  which  is  exceedingly  signifi- 
cant. In  the  port  of  Galveston  the  quoted  rate  on  cotton  has 
fallen  from  $3.50  per  hundred  to  $2.50  to  Bremen,  to  Rotterdam 
from  $2.50  to  $2  and  $2.10;  to  Barcelona  from  $1.35  to  85  cents. 
It  would  seem  from  this  that  while  we  have  been  talking  on  the 
shipping  bill  prices  have  been  going  down,  and  that  raises  the 
very  important  question  as  to  whether  it  is  not  best  to  deliberate 
and  to  talk  once  in  a  while. 

Dangerous  Possibilities 

I  have  been  interested  in  many  measures  in  the  Senate  and 
House  of  Representatives,  but,  my  fellow  citizens,  I  know  of 
none  that  seems  to  me  is  fraught  with  more  dangerous  possibili- 
ties. You  must  always  take  into  account  in  every  piece  of  legis- 
lation not  only  what  it  is  in  itself  but  the  precedent  that  it  es- 
tablishes. What  will  be  done  next.  Why,  it  seems  to  me  that 
in  every  word  that  Secretary  McAdoo  uttered  against  the  lend- 
ing of  $250,000,000  to  the  cotton  growers  he  was  condemning  the 
spending  of  money  out  of  the  Treasury  which  would  inure  to  the 
benefit  of  some  particular  locality  in  this  country.  He  referred 
to  $28,000,000  loaned  to  the  States.  Does  anybody  deny  that  that 


I76  SELECTED   ARTICLES 

is  a  fair  debt.  But  the  Treasurer  of  the  United  States  was  di- 
rected by  Congress  never  to  collect  a  nickle  of  it  until  further 
ordered,  and  you  and  I  will  have  passed  into  another  sphere  be- 
fore that  further  order  is  issued.  So  it  is  in  regard  to  this  ship- 
ping bill.  If  the  shipping  corporation  is  once  organized  and  some- 
one can  get  lower  rates  than  the  normal,  can  get  advantages  over 
his  competitor,  the  agitation  to  continue  it  will  remain  long  after 
its  usefulness  has  been  disproved  and  the  boats  ought  to  be  sold. 

There  are  some  things  that  it  does  not  do  to  trifle  with,  my 
friends.  If  above  anything  in  my  life  I  have  wanted  to  take  a 
stand  it  is  for  the  people  and  all  the  people  of  the  United  States 
against  any  section  and  any  party.  I  deplore  the  fact  that  an 
organized  minority  or  interest,  small  in  number,  is  often  more 
influential  here  at  Washington  than  the  great  body  of  the  people 
who,  hampered  by  inertia  and  lack  of  interest,  do  riot  give  suffi- 
cient attention  to  the  general  good.  A  public  man  oftentimes 
promotes  his  political  chances  more  by  a  single  bill  that  helps  a 
single  person  than  by  any  statute  for  the  general  good  that  he 
may  be  instrumental  in  acting. 

I  repeat — while  we  have  been  deliberating  the  reason  for  this 
bill  has  gone  by  or  is  going  by.  The  arguments  on  behalf  of  it 
made  at  the  beginning  were  abandoned.  Now  that  relations  with 
South  America  do  not  require  increased  shipping,  some  other 
reason  is  proposed. 


DEVELOPMENT  OF  A  NATIONAL  SHIPPING 
POLICY1 

How  many  of  our  people  realize  that  in  the  most  essential 
points  upon  which  the  law  is  expected  to  enlighten  the  shipowner, 
the  American  statutes  relative  to  shipping  are  either  mute  or  so 
ambiguous  that  there  is  probably  not  one  ship  operator  in  this 
country  that  could  offhand  tell  you  in  the  most  general  way  what 
is  and  what  is  not  permissible  in  the  operation  of  ships,  as  far 
as  the  customs  regulations,  manning,  victualling  and  equipment 
are  concerned.  Our  laws  are  very  strict  on  lifesaving  equipment. 
They  provide  for  a  more  stringent  test  of  boilers  than  is  the  case 
elsewhere,  but  although  the  equipment  of  lifeboats  is  minutely 

1  By  Robert  Dollar,  President  of  The  Robert  Dollar  Co.,  San  Fran- 
cisco. 


AMERICAN   MERCHANT   MARINE  177 

defined,  there  is  no  law  that  requires  the  navigating  compasses  to 
be  properly  adjusted  and  compensated,  while  the  engine  which 
receives  its  steam  from  the  boiler  that  is  so  carefully  tested  by 
the  Federal  Inspectors  does  not  come  in  for  any  mention  at  all 
in  the  book  of  rules  that  are  enforced  upon  American  ships  in  the 
name  of  safety,  but  which  go  so  far  wide  of  the  mark  that  the 
insurance  underwriters  give  no  consideration  to  the  steamboat 
inspection  certificates  in  estimating  the  worth  of  a  ship  for  in- 
surance purposes,  while  Lloyds  or  other  foreign  classification 
certificates  are  readily  accepted.  Thus  it  is  possible  to  build 
under  our  laws  steamships  that  defy  so  much  all  accepted  ideas 
as  to  safety  in  ships,  that  they  would  be  uninsurable.  Hence,  no 
ship  is  ever  built  in  this  country'  that  is  not  far  and  away  in 
excess  of  the  requirements  of  the  Steamboat  Inspection  Service, 
because  ships  need  insurance  and  underwriters  are  quite  a  bit 
more  exacting  than  the  United  States  government  in  their  ideas 
as  to  what  constitutes  a  safe  ship,  although  they  are  not  so  fin- 
nicky  as  to  the  thousand  and  one  trifles  that  the  Steamboat  In- 
spection Service  is  so  keen  upon,  perhaps  for  the  reason  that  the 
rules  being  so  vague  about  the  essentials  of  proper  construction 
and  equipment,  it  is  well  that  so  much  attention  were  paid  to  the 
apparatus  that  comes  into  play  only  when  it  is  no  longer  safe  to 
remain  on  board  a  vessel. 

American  licensed  officers,  who  are  better  paid  than  those 
sailing  under  any  other  flag,  are  submitted  before  obtaining  their 
certificates  to  a  very  strict  examination  on  lifeboat  drills,  fire 
drill,  etc.,  but  the  official  requirements  in  other  directions,  are 
very  lax.  Therefore  but  few  of  our  officers  know  anything  of 
such  methods  of  signalling  as  Morse-ing  or  semaphoring,  so  that 
when  a  ship  is  spoken  at  sea  by  those  modern  methods  and  she 
does  not  reply,  it  is  customary  among  foreign  navigators  to  re- 
mark that  "she  must  be  a  Yankee."  Yet  the  law  now  obliges 
American  ships  to  carry  third  mates,  when  in  other  countries 
many  vessels  which  would  require  those  officers  if  operated  under 
the  American  flag,  carry  often  but  an  "only  mate,"  the  second 
mate  being  virtually  a  boatswain. 

Time  does  not  permit  complete  enumeration  of  the  short- 
comings of  our  laws  as  regards  the  most  essential  points  which 
navigation  laws  ought  to  cover,  contrasting  those  deficiencies  with 
the  onerous  requirements  of  our  statutes.  It  required  the  Euro- 
pean war  to  change  the  regulations  as  to  measurements  of  ships 

14 


i;8  SELECTED   ARTICLES 

so  as  to  bring  our  methods  in  conformity  with  the  universal 
usage.  And  the  reason  why  the  regulations  were  changed  was 
not  that  they  worked  an  injustice  on  American  ships,  but  that 
foreign-built  ships  put  under  the  American  flag  under  the  emer- 
gency act  would  have  had  their  net  register  tonnage  increased — 
that  on  which  shipping  dues  were  paid — if  they  had  been  granted 
new  tonnage  certificates  on  the  American  basis. 

I  have  mentioned  the  foregoing  merely  to  give  you  practical 
examples  of  the  vicissitudes  which  confront  the  American  ship- 
owner who  has  to  contend  in  the  prosecution  of  his  daily  business 
with  the  Treasury  Department,  the  Bureau  of  Navigation,  the 
Steamboat  Inspection  Service,  the  Public  Health  and  Marine 
Hospital  Service,  the  Immigration  Service  and  at  times  the  De- 
partment of  Justice,  to  say  nothing  of  a  multitude  of  restrictions 
imposed  by  local  authorities,  as  represented  by  boards  of  pilots, 
city  and  state  wharf  authorities,  etc.,  so  that  the  life  of  the 
operator  of  American  ships  bears  a  strong  relationship  to  that  of 
the  little  boy  whose  mother  said  to  the  nurse :  "See  what 
Thomas  is  doing  in  the  nursery  and  tell  him  he  musn't." 

Little  wonder  that  under  such  conditions  the  threat  of  govern- 
ment ownership  is  sufficient  to  frighten  away  all  newcomers  who 
see  nothing  ahead  but  increased  official  interference,  without 
obtaining  from  the  government  of  this  country  that  measure  of 
consideration  to  which  the  shipowners  of  other  countries  have 
become  accustomed  and  which  has. taken  such  concrete  expression 
as  the  constant  reliance  of  the  public  services  upon  the  assistance 
which  the  national  shipping  could  render  in  the  ordinary  prose- 
cution of  its  commercial  mission. 

Privately  Owned  Shipping  Can  Meet  Military  Needs 

Thus,  England,  Germany  and  Japan  dispense  with  troopships 
and  naval  colliers,  obtaining  such  vessels  as  are  needed  for  the 
transport  of  troops  to  the  Colonies  overseas  and  for  the  transport 
of  coal  to  the  fleet  during  manoeuvres,  from  the  commercial  fleet 
under  the  national  flag  that  could  always  be  drawn  upon  for 
such  purposes.  Here,  on  the  contrary,  as  soon  as  our  nation 
became  possessed  of  outlying  dependencies,  the  transportation 
of  troops  to  those  parts  was  confided  to  a  fleet  of  government 
vessels  purchased  for  that  one  purpose,  while  the  Navy  Depart- 
ment that  always  voiced  the  complaint  that  it  was  hampered  by 
lack  of  funds,  undertook  the  construction  of  a  large  fleet  of 


AMERICAN   MERCHANT   MARINE  179 

colliers  built  internally  like  the  well-known  commercial  steam 
colliers  operating  on  the  Atlantic  Coast,  except  that  the  naval 
vessels  are  fitted  with  mechanical  discharging  gear  for  the  pur- 
pose of  delivering  coal  into  the  bunkers  of  warships.  Recently 
the  government  of  the  Canal  Zone  took  delivery  of  two  large 
steam  colliers  designed  to  carry  coal  to  the  bunkering  stations 
on  the  Panama  Canal.  These  vessels  which  are  operated  on 
such  an  extravagant  scale  that  undoubtedly  their  operation  is 
costing  much  more  than  the  same  service  could  be  obtained  for 
by  means  of  chartered  commercial  vessels.  Unfortunately  it 
has  been  the  consistent  policy  of  our  government  to  proceed  al- 
ways on  the  assumption  that  American  ships  were  non-existent 
or  could  not  be  created. 

Pending  Proposals  for  Relief 

Various  remedies  have  been  proposed  for  the  solution  of  our 
merchant  marine  question.  The  proposals  now  figuring  most 
prominently  before  the  public  may  be  summed  up  under  three 
heads :  First,  government  ownership ;  second,  equalization  of 
operating  costs,  under  whatever  name  may  be  given  to  the  di- 
rect assistance  of  the  state  to  shipping ;  third,  the  development 
of  a  truly  national  shipping  policy  along  lines  recommended  by 
a  permanent  non-partisan  shipping  board  after  business-like 
consideration  of  the  country's  real  shipping  necessities. 

Let  us  examine  the  first  proposition :  government  ownership 
is  nothing  new.  It  has  been  in  operation  in  other  countries 
before  this,  with  the  same  invariable  outcome  of  failure.  We 
are,  nevertheless,  free  to  consider  without  prejudice  and  with- 
out bias,  whether  the  proposal  as  made  to  the  American  people 
in  its  newest  form,  contains  any  element  that  ought  to  recom- 
mend its  adoption  as  a  national  policy,  whatever  form  the  policy 
may  take.  The  intention  is,  substantially,  to  acquire  a  large  fleet 
of  merchant  ships  to  be  operated  in  the  interest  of  our  foreign 
trade  in  such  directions  as  the  prospect  of  immediate  profits 
precludes  the  free  operation  of  ships  run  for  purely  commercial 
purposes. 

Government  Ownership 

We  see  here  a  proposition  to  pay  a  subsidy  of  far  greater 
scope  than  any  subsidy  policy  that  has  as  yet  been  proposed; 
for  any  subsidy  contract  is  necessarily  limited  as  to  the  amount 


180  SELECTED   ARTICLES 

of  money  which  may  be  disbursed  to  the  shipowners  undertaking 
the  subsidized  services,  whereas,  with  the  government  itself 
operating  the  ships  on  that  extravagant  scale  with  which  all 
business  men  are  familiar,  there  is  no  limit  to  the  deficit  that 
may  be  accumulated  by  the  ships  performing  the  services  yet  to 
be  announced.  Therefore,  if  on  the  ground  of  economy  only, 
it  would  seem  to  be  part  of  wisdom  at  least  to  endeavor  to  find 
private  shipowners  willing  to  undertake  specified  voyages  for 
stipulated  sums  of  money,  proper  guarantees  as  to  the  ability 
of  the  contractor  to  continue  the  service  after  its  initiation 
being  given  by  the  recipients  of  the  subsidies. 

This  comment  relates  to  the  principle  of  government  owner- 
ship, which  it  is  impossible  to  escape  whatever  form  the  new 
government  shipping  bill  may  take.  At  the  time  this  paper  was 
written,  the  new  bill  had  not  been  introduced,  and  it  would 
have  been  unwise  to  attempt  to  discuss  unofficial  reports  that, 
instead  of  being  confined  to  government  operation,  the  vessels, 
constructed  by  the  government,  may  be  leased  to  private  com- 
panies for  operation  in  certain  trades  not  yet  designated.  That 
all  vessels  entering  American  ports  will  be  subject  to  regulation 
of  freight  rates  and  service,  and  that  the  entire  lot  will  be  ad- 
ministered, after  the  government  ownership  principle  has  been 
embodied  in  it,  by  the  shipping  board.  This  much,  however,  is 
fair  to  say :  The  government  proposes  to  embark  in  a  business 
which  normally  it  costs  25  per  cent  to  35  per  cent  more  to 
conduct  under  the  American  than  under  foreign  flags.  Unless 
the  government  can  perform  the  service  more  cheaply  than 
private  enterprises,  it  must  incur  deficits  to  be  met  out  of  the 
public  treasury.  The  vessels  cannot  be  leased  to  private  com- 
panies unless  private  companies  can  operate  them  profitably. 

In  other  words,  the  only  way  the  government  can  induce 
private  companies  to  operate  those  ships  under  the  American 
flag,  under  the  conditions  prevailing  before  the  war,  and  surely 
will  prevail  after  the  war,  is  to  make  the  leasing  price  low 
enough  to  offset  the  excess  of  operating  cost  over  that  of  our 
competitors.  Somebody  must  pay,  and  under  the  government 
ownership  principle  it  will  be  the  taxpayer.  If,  then,  the  prin- 
ciple of  government  aid  is  exercised  only  through  the  leasing 
of  government-owned  vessels  to  private  companies,  the  American 
flag  in  foreign  trade  will  become  a  government  monopoly. 


AMERICAN   MERCHANT   MARINE  181 

The  increase  of  our  shipping  in  foreign  trade  will  depend 
upon  the  willingness  of  the  taxpayers  to  increase  the  appropria- 
tions to  be  made  for  the  new  construction,  and,  possibly,  con- 
tinued deficits  in  the  governmental  shipping  policy  account. 

In  other  words,  the  shipping  policy,  requiring  continuing  and 
increasing  appropriations,  will  be  under  debate  at  each  session 
of  Congress.  It  is  easy  to  see  how  sectional  and  political  con- 
siderations may  complicate  any  shipping  progress  dependent 
upon  the  government  ownership  policy. 

Can   Government  Ownership  Meet  All  Shipping  Needs 

Another  and  most  important  consideration  remains  to  be 
weighed  most  carefully  before  we  can  dismiss  this  matter  of 
government  ownership.  We  desire  ships  as  another  factor  in  the 
creation  of  national  wealth  for  the  purpose  of  retaining  for 
ourselves  part  of  the  profits  on  our  carrying  trade  that  we  have 
in  the  past  been  disbursing  abroad.  In  what  respect,  therefore, 
would  government  ships  run  for  the  obvious  purpose  of  working 
on  unprofitable  service  constitute  an  accession  to  our  wealth? 
As  enunciated,  the  proposal  can  only  result  in  increasing  the 
burden  of  federal  taxation  at  a  time  when  the  nation  is  accum- 
ulating a  deficit. 

However,  we  are  told  that  the  foremost  consideration  in  the 
government  ownership  and  operation  of  steamship  services  is 
for  the  national  defense,  as  the  ships  thus  created  would  be 
available  in  time  of  war  as  naval  auxiliaries.  This  latter  point 
has  a  strange  sound  in  such  times  as  these,  when  we  see  laid 
up  in  our  own  harbors  the  naval  auxiliaries  of  a  great  European 
power,  whose  inability  to  maintain  her  sea  power  during  the 
conflict  now  raging,  has  set  at  naught  all  the  preparations  made 
in  times  of  peace  for  the  mobilization  of  its  auxiliaries. 

On  the  other  hand,  what  an  object  lesson  is  offered  to  us  by 
the  immense  requisitions  of  shipping  made  by  Great  Britain 
since  the  war  began,  for  the  purpose,  not  only  of  transporting 
men  and  ammunition  to  the  seat  of  war,  but  also  for  the  pur- 
pose of  keeping  up  her  importations  of  food  for  her  people !  It 
was  not  the  mail  contracts  under  which  certain  ships  were  to 
be  built  to  Admiralty  specifications  that  gave  Great  Britain  the 
million  tons,  or  more,  of  shipping  that  she  has  kept  constantly 
under  requisition  since  the  war  began,  maintaining  that  auxiliary 


182  SELECTED  ARTICLES 

fleet  at  the  highest  point  of  efficiency  by  the  constant  interchange 
of  vessels  drawn  from  the  immense  mercantile  fleets  that,  in  the 
days  of  peace,  carried  her  coal  and  manufactures  to  all  parts 
of  the  world,  and  came  back  laden  with  raw  materials  and  food- 
stuffs. It  will  always  be  possible  to  adapt  war  necessities  to  the 
opportunities  afforded  by  the  existence  of  mercantile  fleets  ex- 
isting solely  as  instruments  of  trade  for  the  procurement  of 
wealth,  but  to  create  fleets  of  commerce-carriers  built  primarily 
as  naval  auxiliaries  according  to  the  ideas  of  naval  and  military 
experts  whose  notions  of  what  constitutes  the  proper  type  of 
ship  suited  to  war  requirements,  are  about  as  fixed  as  those  of 
designers  of  ladies'  hats,  is  the  very  worst  delusion  that  can  be 
entertained,  and  one  which  may  bring  disaster  upon  us  in  the 
day  of  need  through  the  false  hope  which  it  fosters. 


GOVERNMENT  OWNERSHIP  POLICY  DETERS 
PRIVATE  ENTERPRISE1 

One  of  the  chief  arguments  on  behalf  of  the  government 
ownership  policy  has  been  that  it  would  provide  transportation 
for  the  export  of  commodities,  the  shipment  of  which  was  then 
crippled  by  lack  of  bottoms,  and  that  producers  would  escape 
the  burden  of  high  freight  rates,  characteristic  of  transportation 
in  all  parts  of  the  world  since  the  outbreak  of  the  war.  Little 
heed  is  given  to  the  fact  that  by  the  immobilization  of  the  mer- 
cantile marine  of  the  Teutonic  allies  and  the  impressment  of 
large  amounts  of  British  and  other  tonnage  for  military  pur- 
poses, as  well  as  the  destruction  of  belligerent  ships,  and  the 
delays  incident  to  lack  of  labor  in  the  ports  of  belligerent  coun- 
tries, has  very  greatly  reduced  the  world's  available  tonnage. 
Nor  has  it  been  made  clear  where  the  new  tonnage  necessary 
to  provide  additional  facilities  would  be  found. 

The  government  policy  was  not  adopted,  but  the  fact  remains 
that,  by  means  of  existing  transportation  facilities,  the  value  of 
our  exports  during  the  first  year  of  the  war  far  exceeded  that 

1  Report  of  the  National  Foreign  Trade  Council  on  the  Merchant 
Marine,  submitted  at  the  Second  Annual  Meeting  of  the  Council,  Septem- 
ber 23,  1915.  p.  7-»4- 


AMERICAN    MERCHANT   MARINE  183 

of  the  preceding  year  and  that,  for  the  most  part,  vastly  higher 
prices  were  received  by  our  producers. 

Any  policy  that,  regardless  of  the  normal  operation  of  the 
law  of  supply  and  demand,  places  at  the  disposal  of  any  single 
class  of  producers  a  fleet  of  government  steamers  is  bound  to 
produce  privileged  classes,  for  the  government,  presumably,  will 
not  provide  sufficient  tonnage  to  carry  all  our  exports  and  im- 
ports, but  will  operate  with  such  ships  as  it  may  supply  at  lower 
than  the  market  rates  wherever  that  course  may  be  deemed 
necessary  for  the  supposed  advantage  of  the  United  States  ex- 
port trade.  How,  under  this  policy,  will  it  be  determined  in 
whose  interest  this  necessity  is  most  pressing?  Will  it  be  for 
the  North,  South,  East  or  West?  Will  it  favor  manufactures 
or  raw  material?  If  the  operation  of  government  steamers  in- 
volves a  deficit  to  be  met  from  the  national  treasury,  the  policy 
will  amount  to  the  bestowal  of  a  bounty  upon  the  favored  com- 
modities and  communities.  It  may  likewise  be  asked  what  class 
of  American  importers  will  be  favored  in  the  carriage  of  return 
cargoes.  Will  these  public  vessels  seek  always  the  higher  priced 
goods  at  the  expense  of  the  importers  of  low  priced  products, 
who  are  also  subject  to  taxation  to  meet  any  losses  sustained  by 
unprofitable  governmental  policies? 

Government  ownership  of  oversea  transports  used  for  com- 
mercial purposes  would  be  a  natural  concomitant  of  government- 
made  goods  brought  to  shipside  by  government  railways,  sold  by 
government  employees  and  laden  by  civil  service  stevedores.  As 
a  commercial  proposition,  government-owned  ships  in  foreign 
trade  can  only  result  in  disorganization  of  existing  trade  routes 
in  which  government  ships  might  engage,  while  bringing  about 
complete  paralysis  of  individual  effort  to  obtain  for  private 
American  ships  a  larger  share  of  American  sea-borne  commerce. 
Thus,  in  the  event  of  government  ownership  and  operation  of 
merchant  vessels  becoming  a  settled  policy,  the  problem  of  the 
future  of  American  shipping  will  solve  itself  by  the  extinction 
of  private  endeavor. 

It  is  not  strange  that  American  capital  has  displayed  little 
inclination  to  embark  upon  shipping  ventures,  which  the  govern- 
ment promised  immediately  to  oppose  with  uneconomic  competi- 
tion. This  alone  was  a  sufficient  deterrent,  but  in  the  midst  of 


184  SELECTED   ARTICLES 

the  agitation,  another  unfavorable  policy  was  introduced  by  the 
enactment  of  the  Seamen's  Law,  which  in  its  present  shape  places 
virtually  upon  American  ships  alone  in  foreign  trade  burdens  in 
excess  of  those  found  in  the  maritime  legislation  of  any  nation 
with  which  American  ships  are  expected  to  compete. 

Seamen* 's  Act  an  Added  Handicap 

Among  other  things,  the  new  law  purports  to  grant  the  sea- 
men of  American  ships  better  quarters  and  better  working  con- 
ditions. In  this  respect,  the  Act  is  in  consonance  with  recent 
industrial  legislation,  and  does  not  appear  to  exceed  in  its  re- 
quirements similar  provisions  under  the  laws  of  Great  Britain, 
Germany,  Norway  and  France ;  as  a  matter  of  fact  most  Ameri- 
can ships  have  for  years  furnished  as  good  accommodations  as 
those  prescribed  by  the  law,  or  better.  However,  under  the  guise 
of  insuring  greater  safety  for  passengers,  this  law  provides  for 
the  carrying  of  a  greater  number  of  deck  hands,  rated  as  "able 
seamen,"  than  is  required  by  the  laws  of  any  other  country,  and 
furthermore,  contains  a  stipulation  in  Sec.  13  that  75  per  cent 
of  the  crew  in  all  departments  must  be  able  to  understand  any 
order  given  by  the  officers.  This  will  prevent  the  employment 
of  Asiatic  crews  on  American  vessels,  but  will  not  affect  Japa- 
nese vessels  on  which  Japanese  officers  and  crews  speak  the  same 
language  and  the  crews  receive  wages  far  less  than  those  of 
American  and  European  sailors.  The  promised  effect  of  the 
law's  operation  will  be  to  turn  over  our  share  of  trans-Pacific 
shipping  to  the  Japanese.  The  American  flag  is  disappearing 
from  the  Pacific  and  American  interests  in  the  Far  East  stand 
dismayed  at  this  blow  to  our  national  prestige  and  commerce. 

The  International  Convention  for  Safety  at  Sea,  that  was 
participated  in  by  this  nation,  established  new  and  higher  stand- 
ards concerning  the  life-saving  equipment  of  ships  and  the  man- 
ning of  such  equipment.  By  means  of  the  Seamen's  Act,  the 
drafting  of  these  standards  into  a  statutory  enactment  has 
virtually  linked  in  the  public  mind  the  labor  union  demands  and 
the  question  of  safety  at  sea,  so  that  a  good  deal  of  uninformed 
Fentiment  has  been  enlisted  on  behalf  of  this  measure. 

Ship  owners  offer  no  objections  to  the  requirements  laid 
down  by  the  International  Conference  on  Safety  at  Sea  but  do 
not  wish  to  be  put  under  the  disadvantage  of  complying  with 


AMERICAN   MERCHANT   MARINE  185 

several  of  these  rigid  requirements  which  they  regard  as  im- 
practicable to  introduce  on  existing  vessels,  until  the  convention 
is  actually  put  into  force  by  the  nations  with  whom  they  are 
compelled  to  compete. 

The  Attorney-General  has  decided  that  the  requirements  of 
Section  14  of  the  Act  as  to  life-saving  equipment  and  the  man- 
ning of  such  equipment  do  not  apply  to  foreign  ships  owned  in 
countries  with  which  the  United  States  has  "reciprocity"  ar- 
rangements as  regards  passenger-carrying  certificates. 

The  application  of  Section  14  to  American  ships  only  will 
place  such  a  heavy  handicap  on  American  passenger-carrying 
ships  as  to  exclude  them  from  competition  in  practically  all 
trades. 

No  legal  opinion  has  been  rendered  on  Section  13  which 
makes  the  "able  seaman"  and  "language"  clause  applicable  to  all 
vessels  leaving  United  States  ports,  but  it  is  understood  in  ship- 
ping circles  that  Section  13  will  be  construed  to  mean  that  the 
crew  of  any  ship  should  understand  ordinary  words  of  com- 
mand. The  enforcement  of  this  section  with  respect  to  foreign 
ships  is  bound  to  result  in  diplomatic  friction,  and  the  feeling 
is  that  foreign  vessels  will  have  little  difficulty  in  evading  its 
requirements  as  far  as  the  language  of  officers  is  concerned, 
since  officers  and  men  usually  speak  the  same  tongue.  The  hard- 
ships arising  from  the  language  test  will  then  fall  chiefly  on 
American  ships,  whose  officers,  as  a  rule,  speak  their  own  lan- 
guage only  and  which  would  then  be  required  to  employ  higher 
priced  crews  who  also  understand  orders  given  in  our  language. 
The  full  brunt  of  Section  13  will  thus  fall  on  American  vessels 
alone,  making  it  impossible  for  them  to  compete  in  the  Pacific 
trades,  and  difficult  because  of  the  unequal  expense  of  wages, 
to  compete  in  any  foreign  trade. 

In  order  to  enforce  the  letter  of  the  law  the  Department 
would  have  to  provide  itself  at  each  port  with  a  staff  of  inter- 
preters who  know  the  dialects  of  the  maritime  ports  of  Asia, 
Africa,  America  and  Europe. 

The  increase  of  the  merchant  fleet  through  the  operation  of 
the  Ship  Register  Act  was  arrested  by  the  approval  of  the  Sea- 
men's Act  on  March  4,  1915.  Up  to  February  27  there  had  been 
transferred  to  the  American  flag  133  foreign-built  vessels  of 
475,524  gross  tons.  Since  that  time,  the  transfers  have  been 


i86  SELECTED   ARTICLES 

only  28  vessels  of  88,754  gross  tons.  The  abnormal  conditions 
of  war  have  for  the  time  being  offset  the  greater  cost  of  opera- 
tion of  American  vessels,  but  shipping  interests  are  indisposed 
to  purchase  foreign-built  ships  and  transfer  them  to  American 
register,  subject  to  the  restrictions  of  the  Seamen's  Act  which, 
if  continued  in  its  present  form,  will  place  them  at  a  disadvan- 
tage following  the  war  when  normal  conditions  of  foreign  com- 
petition are  restored  with  peace.  Moreover,  it  is  a  grave  ques- 
tion whether  the  Seamen's  Act  will  not  force  vessels  already 
transferred,  to  seek,  after  the  war,  the  freer  operation,  and 
accommodation  to  economic  conditions,  possible  under  the  for- 
eign flags  from  which  they  have  been  transferred  to  our  own. 

Altogether,  the  Seamen's  Act  is  the  culmination  of  a  series 
of  measures  which  have  adversely  affected  the  prospects  of 
American  shipping  in  the  foreign  trade.  It  is  the  logical  out- 
come of  years  of  haphazard  efforts  to  deal  with  a  problem,  the 
solution  of  which  necessitates  a  settled  policy  and  a  well  defined 
purpose. 

Pending  the  development  of  such  a  policy,  a  definite  recom- 
mendation for  the  attainment  of  which  is  herewith  submitted, 
your  committee  believes  that  the  operation  of  objectionable  fea- 
tures of  the  Seamen's  Act  (which  is  to  take  effect  as  regards 
American  ships  November  4;  foreign  ships  March  4)  should  be 
suspended,  or  that  if  this  suspension  is  not  found  expedient,  its 
provisions  as  to  the  language  test  and  percentage  of  able  sea- 
men among  the  deck  crew,  and  certain  parts  of  the  regulation  is 
to  lifesaving  appliances,  etc.,  without  impairing  safety,  should 
be  promptly  amended. 


WILL  THE  PENDING  BILL  ENCOURAGE 
AMERICAN  SHIPPING?1 

The  almost  universal  sentiment  of  the  people  of  the  United 
States  for  a  greater  merchant  marine  proceeds  from  a  somewhat 
intangible  desire  that  American  commerce  shall  be  carried  under 

1  Statement  by  the  National  Foreign  Trade  Council  to  the  Merchant 
Marine  Committee  of  the  House  of  Representatives  on  the  Administra- 
tion Shipping  Bill  H.  R.  10,500  in  the  form  introduced  January  31,  1916. 
p.  9-20.  May,  1916. 


AMERICAN   MERCHANT   MARINE  187 

our  flag.  It  is  evident  from  England's  experience  that  no  nation 
can  transport  all  of  its  commerce  in  its  own  vessels. .  Assuming 
that  the  carriage  of  60  per  cent  of  American  foreign  commerce 
in  American  vessels  would  render  this  country  reasonably  inde- 
pendent of  the  carrying  of  the  merchant  marine  of  any  other 
nation,  it  is  important  to  determine  how  great  an  American  ton- 
nage would  be  necessary.  In  1915,  1,871,543  tons  of  American 
shipping  carried  14.3  per  cent  of  the  total  foreign  commerce. 
This  tonnage,  for  the  most  part,  was  engaged  in  traffic  with 
nearby  markets,  the  West  Indies  and  Central  America,  Canada 
and  Europe.  With  few  exceptions  only  that  portion  of  it  which 
was  transferred  from  foreign  flags  at  the  outbreak  of  the  war 
steamed  regularly  to  more  distant  parts  of  the  world. 

Six  to  Ten  Million  Tons  Needed  to  Carry  60  per  cent  of  U.  S. 

Trade 

Assuming  that  American  shipping  large  enough  to  carry  60 
per  cent  of  our  own  commerce  would  find  itself  drawn  into 
general  world  trade  (as  is  the  British  Merchant  Marine),  it  is 
estimated  that  somewhere  between  6,000,000  and  10,000,000  gross 
tons  of  steamers  of  various  sizes  and  types  would  be  required, 
to  be  obtained  by  construction  and  transfer  from  other  flags, 
the  total  being  reached  during  the  next  decade  and  consisting  of 
passenger  and  cargo  liners ;  specially  constructed  vessels  (tankers 
and  colliers),  and  tramp  steamships,  discharging  the  functions 
enumerated  at  the  beginning  of  this  report.  Included  therein 
is  the  vital  question  of  national  defence.  Observation  of  the 
present  British  control  of  the  seas  and  the  transportation  of  allied 
troops  to  fighting  zones  both  near  and  remote  from  England 
and  France  establishes  that  a  merchant  shipping  adequate  to  the 
needs  of  a  diversified  commerce  automatically  provides  the  types 
of  vessels  most  needed  for  the  transportation  of  military  and 
naval  supplies  and  troops  in  time  of  war. 

The  value  of  this  additional  tonnage  [6,000,000  to  10,000,000 
tons]  would  range  somewhere  between  $50  a  ton  deadweight,  the 
price  prevailing  before  the  war,  and  $100  per  ton,  the  price  of 
construction  at  the  present  time,  or  a  total  of  from  $520,000,000 
to  $1,040,000,000,  which  to  earn  the  6  per  cent  average  dividend 
rate,  after  depreciation,  characteristic  of  British  shipping  over 
an  extended  period  of  prosperous  and  depressed  years,  would 


i88  SELECTED   ARTICLES 

have  to  return  to  the  investors  from  $31,200,000  to  $62,400,000 
per  annum. 

The  foregoing  estimate  of  the  tonnage  required  is  liberal, 
but  in  size  it  would  still  be  little  more  than  half  the  total  of 
British  steam  tonnage  which,  before  the  war,  was  about  45  per 
cent  of  that  of  the  entire  world.  At  a  time  when  predictions  are 
freely  made  that  the  United  States  will  become  the  world's 
banker  and  acquire  the  greatest  share  of  the  world's  foreign 
trade,  a  shipping,  in  the  foreign  trade,  of  from  6,000,000  to 
10,000,000  gross  tons2  would  appear  not  an  excessive  goal  to  be 
attained  ten  or  twenty  years  hence.  Unless  such  progress  is 
made  the  United  States  will  not  become  one  of  the  foremost 
maritime  nations. 

It  is  obvious  that  the  rise  of  the  United  States  as  a  maritime 
nation  must  necessarily  be  accomplished  by  the  transfer  of  a 
certain  amount  of  tonnage  from  foreign  to  American  register. 
Indications  are  that  after  the  leading  maritime  nations  have  made 
up  the  wastage  of  war  the  world's  tonnage  will  be  adequate  for 
world  commerce.  For  the  United  States  alone,  by  construction, 
to  add  say  a  million  tons  a  year,  for  eight  years,  to  the  world's 
shipping,  in  foreign  trade,  would  cause  shipping  so  far  to  exceed 
available  commerce  as  to  depress  freights  to  a  point  where  ship- 
ping would  be  unprofitable  to  all  concerned.  It  would  seem 
more  feasible  for  this  country  to  achieve  a  greater  measure  of 
shipping  independence  by  a  combined  policy  of  purchase  of  for- 
eign built  vessels  and  new  construction  in  American  shipyards, 
for  precisely  as  the  profitable  operation  of  American  shipping 
will  be  a  national  asset  the  development  of  American  shipbuild- 
ing for  this  and  other  countries  will  strengthen  the  country's 
resources. 

Will  the  Pending  Bill  Encourage  the  Desired  Result? 

Advocates  of  the  pending  bill  (H.  R.  10,500)  claim  that  it  is 
a  necessary  first  step  to  encourage  the  full  development  of 
American  shipping.  It  is  fair,  therefore,  to  inquire  just  what 
the  proposed  policy  will  accomplish,  and  whether  it  will  lead  to, 

1  It  should  be  remembered  that  while  the  total  tonnage  reported  by 
the  U.  S.  Commissioner  of  Navigation  on  June  30,  1915,  totalled  8,389,429 
gross  tons,  only  1,871,543  tons  was  registered  for  foreign  trade,  the 
remainder  being  in  the  coastwise,  lake  and  river  trade. 


AMERICAN   MERCHANT,  MARINE  189 

or  permit,  the  further  steps  necessary  to  produce  a  really  great 
American  merchant  fleet. 

Provisions  of  the  Bill3 

Briefly  stated,  the  bill  as  introduced  by  the  Hon.  J.  W.  Alex- 
ander, in  the  House  of  Representatives  January  31,  1916,  pro- 
vides for  the  creation  of  a  Shipping  Board  and  the  raising  of 
$50,000,000  by  issuing  United  States  bonds,  this  sum  to  be  ex- 
pended in  the  construction,  purchase  or  leasing  of  merchant 
vessels,  which  may  be  sold  or  chartered  to  private  companies, 
or  operated  by  the  government  itself,  and  which  may  be  taken 
by  the  government  for  the  use  of  the  army  and  navy  in  time  of 
war.  The  Shipping  Board  is  given  all  the  powers  over  ocean 
transportation  that  the  Interstate  Commerce  Commission  exer- 
cises over  rail  transportation.  No  corporation,  firm  or  individual 
will  be  permitted  to  engage  in  either  domestic  or  foreign  ship- 
ping in  American  ports  without  a  license  from  the  Shipping 
Board.  This  means  that  the  owner  of  every  vessel,  American 
or  foreign,  touching  at  American  ports  must  obtain  a  license. 
No  vessel  will  be  permitted  clearance  unless  its  owners  have 
such  a  license.  If  any  vessel  fails  to  comply  with  all  the  orders 
of  the  Board  regarding  rates  and  service,  rules  and  regulations, 
the  Board  is  authorized  and  directed  to  revoke  the  license  held 
by  the  owners  and  this  will,  presumably,  prevent  clearance  not 
only  of  the  offending  vessel,  but  of  all  vessels  belonging  to  that 
owner.  This  revocable  license  system  is  the  power  by  which  the 
Board  proposes  to  control  all  vessels,  American  or  foreign,  call- 

3  Since  this  report  was  formulated  the  Committee  on  Merchant  Marine 
and  Fisheries  of  the  House  of  Representatives  on  May  9  reported  15,455 
as  a  substitute  for  H.  R.  10,500.  This  limits  the  proposed  regulation  of 
shipping  in  foreign  trade  to  supervision  of  conferences  and  traffic  agree- 
ments, prohibition  of  deferred  rebates,  the  use  of  fighting  ships  and  dis- 
crimination between  shippers  and  localities.  The  provisions  of  H.  R.  10,500 
.for  licensing  all  vessels  clearing  from  United  States  ports,  preferential 
railroad  rates  for  merchandise  to  be  exported  in  American  vessels  and 
prohibiting  sale  of  American  ships  to  non-citizens  except  by  authority  of 
the  shipping  board  do  not  appear  in  the  substitute  bill.  The  authority  of 
the  government  to  operate  the  vessels  obtained  under  the  law  is  limited 
to  five  years  from  the  close  of  the  present  war  and  the  character  of  the 
trade  in  which  private  enterprise  may  operate  the  government-owned  ves- 
sels is  not  delimited.  The  substitute  provides  for  a  shipping  board  of 
seven  instead  of  five  members  and  like  H.  R.  10,500  authorizes  the  issu- 
ance of  $50,000,000  of  United  States  bonds  wherewith  to  purchase,  lease 
or  construct  ships.  Certain  administrative  features  have  been  added,  and 
the  shipping  board  empowered  to  regulate  interstate  water  rates  as  rail 
rates  are  now  regulated  by  the  Interstate  Commerce  Commission. 


IQO  SELECTED   ARTICLES 

ing  at  American  ports,  and  by  which  it  is  proposed  to  regulate 
ocean  freight  rates.  Authority  is  given  for  preferential  rail  and 
ocean  rates  on  merchandise  to  be  exported  in  American  bottoms. 
The  bill  provides  that  no  vessel  enrolled  under  United  States 
laws  shall  be  sold  to  any  save  a  citizen  of  the  United  States. 

Bill  Would  Provide  About  600,000   Tons 

With  the  $50,000,000  derived  from  the  bond  issue,  not  more 
than  600,000  gross  tons  could  be  provided  at  existing  prices,  or 
less  than  one-tenth  of  the  minimum  amount  necessary  to  estab- 
lish the  United  States  in  the  shipping  position  above  described. 

Nothing  like  600,000  gross  tons  is  available  from  the  few 
nations,  which,  during  the  war,  permit  alienation  of  their  mer- 
chant vessels.  American  shipyards  will  not  guarantee  deliveries 
of  new  construction  within  two  years.  Rear  Admiral  Benson 
has  testified  that  the  utmost  government  navy-yards  can  guar- 
antee, if  assured  prompt  deliveries  of  material,  is  six  10,000  ton 
ships  in  two  years.  The  effect  of  the  bill  upon  the  country's 
aspiration  for  larger  shipping  is,  therefore,  more  important  than 
its  possibilities  of  immediate  relief  of  the  present  restriction  of 
American  commerce  due  to  scarcity  of  vessels  and  abnormal 
rates. 

No    Tramp   Steamships   Provided 

The  bill  appears  to  restrict  the  operation  of  these  government 
vessels  (whether  operated  by  the  government  or  by  private 
corporations)  to  trade  directly  between  the  United  States  and 
foreign  countries,  i.e.,  in  the  language  of  the  act,  to  "use  in  the 
transportation  of  the  commerce  of  the  United  States  with  for- 
eign countries,"  and  between  the  United  States  and  our  distant 
possessions;  in  other  words,  to  service  on  certain  fixed  lines. 
It  fails,  therefore,  to  touch  tramp  shipping,  upon  which  the 
greater  part  of  our  exports  and  imports  depend.4 

Either  by  direct  operation  or  leases  of  the  vessels  to  private 
corporations,  the  bill  proposes  to  embark  the  United  States  in  an 
industry  normally  costing  more  to  conduct  under  the  United 
States  than  under  foreign  flags,  and  to  restrict  that  operation 
to  what  often  proves  the  least  remunerative  branch  of  shipping, 

4  The  limitation  quoted  docs  not  appear  in  the  substitute  bill  H.  R. 
15.445- 


AMERICAN   MERCHANT   MARINE  191 

• — established  lines.  Under  normal  conditions  of  peace  private 
companies  can  be  induced  to  operate  government  ships  only  if  the 
rate  of  lease  or  charter  is  sufficiently  lower  than  the  market  or 
offset  higher  American  operating  costs.  Somebody  must  pay  the 
difference.  Under  the  proposed  policy  it  will  be  the  taxpayer, 
just  as  surely  and  completely  as  under  a  subsidy  policy.  If, 
then,  government  aid  is  extended  only  through  leasing  of  gov- 
ernment owned  vessels,  the  American  flag  in  foreign  trade  will 
become  a  government  monopoly.  Increase  of  American  shipping, 
so  long  as  operating  costs  exceed  those  under  foreign  flags,  will 
depend  upon  the  willingness  of  taxpayers  to  increase  appropria- 
tions for  new  construction  and  continued  deficit  in  the  govern- 
ment shipping  account. 

Private  Capital  Willing  but  Discouraged 

With  the  fullest  conceivable  accomplishment  of  this  law  sup- 
plying less  than  one-tenth  of  the  tonnage  necessary  to  make  the 
United  States  a  first-class  maritime  power,  what  prospect  re- 
mains for  the  provision  of  a  greater  American  general  cargo 
carrying  tonnage  of  the  necessary  tonnage  by  private  capital? 
The  willingness  of  capital  to  engage  in  ocean  shipping  is  indi- 
cated by  upward  of  250  vessels  now  under  construction  in 
American  shipbuilding  yards.  Existing  yards  have  been  en- 
larged, abandoned  plants  revived,  and  new  plants  established  to 
meet  the  abnormal  demand  for  construction,  but  whether  vessels 
now  on  the  ways  shall  be  permanently  operated  under  the  Ameri- 
can or  foreign  flags,  will  depend  upon  whether  such  operation  is 
profitable,  and  that  in  turn  depends  upon  government  policy. 

Lack  of  National  Policy 

In  what  situation,  therefore  does  capital  find  itself  when  urged 
to  gradually  finance,  at  a  cost  of  between  half  a  billion  and  a 
billion  dollars,  the  construction  of  6,000,009  to  10,000,000  tons 
of  steamships  of  various  sizes  and  types?  First  of  all,  it  finds 
this  country  without  a  definite  shipping  policy.  Whereas  in  Eng- 
land all  policy,  governmental  and  commercial  has  long  leaned 
toward  shipping,  American  policy  has  ignored  it.  Until  1913  no 
vessel  could  fly  the  American  flag  unless  built  in  the  United 
States.  The  Panama  Canal  Act,  in  the  hope  of  producing  an 
American  tonnage,  which  could  avail  of  the  waterway  built  by 


192  SELECTED   ARTICLES 

American  skill  and  treasure,  reversed  this  protective  shipping 
policy  and  authorized  the  admission  to  American  register,  ex- 
clusively for  the  foreign  trade,  of  foreign  built  vessels  not  more 
than  five  years  of  age.  But  the  increased  cost  of  operating  ves- 
sels under  the  American,  as  compared  with  foreign  flags  was  so 
great  that  not  one  foreign  built  ship  was  transferred  until  the 
war  created  abnormal  conditions,  offsetting  the  higher  cost  of 
operation,  and  the  President,  by  Congressional  authority,  sus- 
pended the  most  onerous  restrictions  of  the  navigation  laws, 
while  the  chief  incentive  was  to  permit  American  owned  foreign-- 
flag vessels  to  gain  the  protection  of  United  States  neutrality. 
This  policy  was  also  designed  to  enable  American  vessels  to 
compete  effectively  with  those  of  other  nations,  but  was  followed 
almost  immediately  by  a  proposal  for  government  ownership  and 
operation  of  vessels,  which  discouraged  private  capital,  for  it 
promised  to  interpose  governmental  competition  regardless  of 
profits,  into  the  shipping  situation. 

Then  came  the  Seamen's  Act,  designed  to  force  the  ship- 
ping of  all  foreign  nations  touching  at  American  ports  to  op- 
erate on  the  same  high  cost  plane  as  vessels  under  the  American 
flag,  but  which,  in  actual  operation,  imposes  certain  restrictions 
on  American  vessels  which  do  not  apply  to  those  of  certain  other 
nations.  All  of  these  policies  were  advocated  "for  the  en- 
couragement of  the  American  Merchant  Marine"  but  no  two  of 
them  originated  in  the  same  quarter.  None  completely  covered 
the  needs  of  American  shipping.  Only  one,  the  Ship  Register 
Act  of  August  18,  1914,  has  been  effective  and  that  solely  by 
reason  of  abnormal  war  conditions.  Private  capital  has  been 
confronted  with  a  succession  of  promises  and  disappointments, 
an  incomplete  and  changing  legislative  purpose. 

Encouragement  or  Restriction? 

The  efforts  of  Congress  to  deal  with  the  subject  have  been 
sporadic  and  fragmentary,  and  it  is  not  yet  apparent  whether  the 
legislative  mind  desires  to  consider  shipping  as  an  industry 
which,  when  properly  developed,  will  render  economical  service 
to  American  foreign  trade,  or  as  a  service  which  should  be  so 
regulated  as  barely  to  exist.  The  pending  bill,  barren  of  en- 
couragement for  privately  owned  shipping,  appears  to  proceed 
from  a  desire  for  governmental  repression  of  rates,  on  the 


AMERICAN   MERCHANT   MARINE  193 

principle  that  the  use  of  American  ports,  improved  at  public 
expense,  is  a  privilege  equivalent  to  that  of  eminent  domain 
enjoyed  by  a  railroad,  and  therefore  obligates  vessels  to  gov- 
ernmental control.  This  seems  to  overlook  the  fact  that  port 
improvement,  from  the  earliest  times,  has  been  designed  to  at- 
tract shipping.  Any  restriction  in  excess  of  those  applying  to 
shipping  at  competing  ports  will  tend  to  nullify  the  benefits  de- 
rived from  enormous  appropriations  for  deepening  channels, 
lighting  roadsteads  and  improving  terminals,  all  of  which  at- 
tracted such  numbers  of  vessels  as  produced  steady  competition 
for  export  freight.6 

American  Shipping  at   Competitive  Disadvantage 

It  is  urged  that  the  application  of  the  law  alike  to  American 
and  foreign  vessels  precludes  discrimination  and  subjects  the 
American  ship  to  no  disadvantage  as  compared  with  the  foreign 
ship  seeking  cargoes  from  the  same  American  port.  American 
vessels,  however,  must  also  meet  in  their  circuitous  voyages  the 
competition  of  foreign  ships  which  never  call  at  American  ports, 
and  therefore  will  never  be  subject  to  the  Seamen's  Act's  re- 
quirements as  to  manning  and  equipment,  or  to  the  proposed 
rate  regulation  of  this  bill.  All  American  vessels  will  be  obliged 
to  meet  the  maximum  requirements  of  the  American  laws,  but 
only  that  portion  of  foreign  shipping  which  calls  at  American 
ports  will  be  similarly  burdened.  The  struggle  for  survival 
would  naturally  occur  in  trade  wholly  foreign  to  the  United 
States,  such  as  from  the  United  Kingdom  to  South  America, 
or  Africa,  or  the  Far  East,  between  American  ships  complying 
with  all  our  extreme  navigation  legislation  and  foreign  ships 
permitted  by  their  governments  to  operate  on  a  competitive  level 
with  rival  maritime  enterprise.  To  live  on  our  own  export  and 
import  trade  American  tramp  steamships  must  be  able  to  live  on 
the  odd  legs  of  the  circuitous  voyages  necessary  to  avoid  return 
in  ballast.  The  fact  that  American  shipping  is  now  highly 
profitable  is  no  criterion  of  its  ability  to  compete  during  a  ship- 
ping depression  such  as  may  follow  a  few  years  after  this  war 
and  such  as  did  follow  the  Boer  war. 

5  The  substitute  bill  modifies  the  rate  regulation  in  foreign  commerce 
proposed  by  H.  R.  10,500. 


15 


194  SELECTED   ARTICLES 

Effect  of  Regulation  of  Rates 

Ocean  shipping  is  the  most  competitive  of  industries;  a  con- 
stant struggle  for  existence,  chiefly  among  nations  for  centuries 
engaged  in  maritime  carrying.  It  is  difficult  to  conceive  suc- 
cess for  the  American  entrant  if  burdened  by  legal  restrictions 
not  borne  by  the  older  and  stronger  opponents.  Insofar  as  such 
laws  apply  equally  to  American  and  foreign  vessels  they  increase 
our  freight  rates  and  handicap  our  trade.  If  they  do  not  apply 
to  foreign  vessels  they  drive  our  ships  out  of  business.  This 
proposed  policy  of  regulation  of  ocean  freight  rates,  springing, 
apparently,  from  dissatisfaction  with  existing  abnormal  rates,  is 
expected  to  benefit  American  shippers,  on  the  ground  that  they 
are  not  already  sufficiently  protected  by  the  normal  operation  of 
the  law  of  supply  and  demand.  Admittedly  abnormally  high 
rates  spring  from  a  scarcity  of  ships.  The  following  Associated 
Press  dispatch  sheds  light  upon  efforts  to  control  shipping  by 
regulation  of  rates : 

Manila,  March  4,  1916. — Inter  island  traffic  is  seriously  affected  by 
the  withdrawal  of  a  number  of  coastwise  trading  vessels  which  have 
accepted  charters  for  foreign  trade.  Four  of  the  ships  have  already  left 
the  local  service  and  six  others  are  preparing  to  leave.  Foreign  charter 
rates  have  been  growing  increasingly  attractive,  whereas  local  rates  for 
transportation  are  stable,  being  fixed  by  laws. 

Ship-Owning  and  Rate  Regulating  Flower  Inconsistent 

The  bill  proposes  to  endow  the  Shipping  Board  with  two  in- 
consistent functions :  that  of  shipowner  and  that  of  regulator  of 
ocean  steamship  rates  and  practices.  At  the  same  time  that  the 
Board  is  charged  with  a  vindication  of  the  policy  of  government 
ownership  and  a  justification  of  the  expenditure  of  $50,000,000 
either  through  operation  of  the  ships  by  the  government  or 
through  leases  to  private  companies,  it  will  have  practically  un- 
limited power  to  prescribe  the  rates  and  practices  of  its  competi- 
tors. Such  a  condition  is  comparable  only  to  the  unthinkable 
possibility  of  a  single  railroad  in  the  United  States  being  given 
the  power  to  regulate  the  rates  and  practices  of  all  its  competi- 
tors. 

Since  export  freight  rates  are,  as  a  general  rule,  paid  by  the 
purchaser  and  do  not  affect  the  seller  unless  they  are  higher  than 
those  enjoyed  by  an  oversea  competitor,  a  government  rate  regu- 
lating policy  would  seem  to  thwart  the  advantage  which  the 


AMERICAN   MERCHANT   MARINE  195 

American  exporter  sometimes  can  obtain  by  a  special  rate  suffi- 
ciently low  to  enable  him  to  place  his  product  in  a  foreign  mar- 
ket at  a  lower  price  than  his  oversea  competitor. 

While  the  bill  provides  that  preferential  rates  may  be  ordered 
by  the  Shipping  Board,  it  is  doubtful  if  this  process  would  be 
sufficiently  expeditious  to  meet  the  needs  of  competition  with  the 
shipping  of  other  countries  whose  governments,  after  careful 
consideration,  have  declined  to  attempt  the  regulation  of  ocean 
freight  rates.  It  is  respectfully  submitted  that  the  control  of 
ocean  freight  rates  by  exercise  of  power  to  deny  clearance  to 
foreign  vessels,  is  a  hazardous  experiment,  vastly  different  from 
the  regulation  of  railroad  rates  in  interstate  commerce,  where 
all  carriers  are  equally  subject  to  federal  control. 

Possibility  of  Reprisals 

In  the  increasingly  keen  competition  for  foreign  trade,  Amer- 
ican vessel  owners  are  at  liberty  to  offer,  and  shippers  to  seek, 
the  lowest  possible  rates  for  the  extension  of  American  trade 
in  neutral  markets.  Whether  an  official  shipping  board's  regula- 
tion of  rates  in  such  manner  as  to  stimulate  American  export 
competition  in  a  given  neutral  market  would  be  deemed,  by  the 
competing  countries,  to  be  a  discriminating  policy,  is  a  consid- 
eration not  to  be  ignored.  The  possibility  of  reprisals  should 
not  be  overlooked.  This  bill  proposes  on  behalf  of  the  United 
States  an  innovation  in  the  "free  ocean"  conditions  under  which 
45,000,000  tons  of  steam  shipping  has  been  established  by  the 
nations  of  the  world  in  foreign  trade,  a  considerable  portion  of 
which  in  time  of  peace  has  always  been  responsive  to  the  needs 
of  American  exports  and  imports.  The  purpose  of  the  pro- 
posed legislation  is  to  supplement  this  responsiveness  to  the  law 
of  supply  and  demand  with  a  certain  compulsion,  but  it  is 
greatly  to  be  feared  that  the  imposition  upon  all  vessels  clearing 
from  American  ports  of  requirements  in  excess  of  those  pre- 
vailing at  the  ports  of  competing  countries  will  drive  away  the 
carriers  whose  ample  numbers  normally  [though  not  during  the 
present  war]  produces  a  competition  assuring  reasonable  rates. 

Regulation  of  Conferences 

Attention  is  called  to  the  fact  that  after  exhaustive  investi- 
gation of  ocean  freighting  conditions,  rates  and  practices,  the 
Merchant  Marine  and  Fisheries  Committee  of  the  House  of 


io6  SELECTED   ARTICLES 

Representatives  deemed  it  wise  to  go  no  further,  in  regulation 
of  water  carriers  in  foreign  commerce  than  is  provided  in  the 
Bill  H.  R.  450,*  now  pending,  which  denies  clearance  only  to 
vessels  operated  by  shipowners  or  charterers  guilty  of  oppres- 
sive practices,  rebating,  etc.,  and  which  provides  for  filing  of 
conference  agreements,  etc.,  for  approval  or  disapproval  by  the 
Interstate  Commerce  Commission,  and  which  forbids  rebating, 
undue  discrimination  between  persons  and  places,  and  authorizes 
the  prescribing  of  maximum  reasonable  rates  only  when  com- 
plaint has  been  made  that  rates  in  effect  are  unreasonably  high 
or  discriminatory.  In  other  words,  it  provides  a  method  for  the 
elimination  of  abuses  without  attempting  to  cover  the  oceans  of 
the  world  with  a  fabric  of  artificial  rates,  a  task  often  con- 
sidered but  never  attempted  by  nations  with  a  far  greater  de- 
pendence than  the  United  States  upon  marine  transportation. 
H.  R.  450  provides  for  no  system  of  licenses.  The  fact  that 
European  maritime  nations  have,  under  war  necessity,  adopted 
a  license  system  in  order  to  retain  the  use  of  their  national 
shipping  in  an  advancing  market,  affords  no  basis  of  comparison 
for  the  delineation  of  an  American  policy  in  time  of  peace. 

Denial  of  Right  of  Sale  Fatal  to  Investment 

The  stipulation  that  no  vessel  registered  or  enrolled  under 
the  laws  of  the  United  States  shall  be  sold,  save  to  an  American 
citizen,  is  designed  to  prevent  a  principle  universally  character- 
istic of  maritime  development,  namely,  the  sale  of  old  ships  to 
make  way  for  new.  A  well  organized  merchant  marine  should 
consist  of  a  large  percentage  of  new  vessels,  the  superior  effi- 
ciency of  which  is  derived  from  lighter  repair  bills  and  lower 
insurance.  Only  the  necessities  of  war  caused  the  European 
maritime  nations  to  forbid  the  alienation  of  their  vessels.  Such 
policy  is  unsuited  to  conditions  of  peace,  and,  in  the  case  of  the 
United  States,  will  seriously  detract  from  the  value  of  shipping 
investments.  That  nation  which  has  the  fewer  ships  should  be 
the  last  one  to  close  its  doors  against  selling  its  ships  except  in 
war  times. 

Your  Committee  believes  the  present  lack  of  clear,  public 
comprehension  of  the  problem  involved  in  the  upbuilding  of 

•  The  general  provisions  of  H.  R.  450  have  been  embodied  in  the 
substitute  bill  H.  R.  15,455- 


AMERICAN   MERCHANT   MARINE  197 

American  shipping  is  such  as  to  render  impossible  national  agree- 
ment upon  any  policy  yet  suggested. 


THE  RESTORATION  OF  OUR  MERCHANT 
MARINE1 

Now,  a  word  as  to  another  expedient  named  by  Judge 
Hardy,  of  discriminating  duties.  I  am  not  an  advocate  of  dis- 
criminating duties.  It  is  not  the  policy  of  the  political  party  to 
which  I  personally  belong.  But  it  is  today  the  law  of  the 
United  States,  enacted  by  an  overwhelming  majority  by  a  Con- 
gress of  the  political  party  to  which  our  visitor  belongs.  Into 
the  Simmons-Underwood  tariff  there  was  written,  in  1913,  a 
provision  that  goods  imported  in  American  ships  should  be  im- 
ported at  a  rate  of  duty  5  per  cent  less  than  if  brought  in 
foreign  ships,  unless  such  a  practice  conflicted  with  the  com- 
mercial treaties  of  the  United  States.  That  policy  was  placed 
on  the  statute  books  by  a  Democratic  majority,  in  a  bill  signed 
by  the  present  President  of  the  United  States.  No  sooner  was 
it  enacted  than  alarm  was  taken  by  the  Treasury  Department 
and  the  Department  of  State,  because  of  protests  from  foreign 
governments.  That  provision  was  as  much  a  part  of  the  law 
of  the  land  as  any  other  part  of  that  tariff  for  revenue  only, 
but  it  was  suspended  as  to  actual  operation;  it  was  nullified  by 
the  Treasury  Department.  The  case  was  taken  to  the  Board 
of  General  Appraisers,  who  declared  that  the  law  was  valid  and 
that  American  ships  could  receive  the  benefit  of  that  5  per  cent 
reduction.  The  bill  was  again  taken  to  the  Federal  Courts,  and 
it  was  decided  that  the  law  was  valid  both  as  to  American  and 
as  to  foreign  ships  of  governments  with  which  we  had  commer- 
cial treaties.  The  law  was  then  taken  to  the  Supreme  Court 
of  the  United  States,  and  there  the  case  is  now  pending  and 
being  argued. 

I  am  not  a  believer  in  discriminating  duties  and,  with  a  word 
or  two  more,  I  will  dismiss  the  subject,  because  I  believe  that 
under  the  circumstances,  the  expedient,  whatever  the  merit  or 

1  Address  by  Winthrop  L.  Marvin,  Member  of  the  Special  Committee 
on  Merchant  Marine  of  the  Boston  Chamber  of  Commerce,  before^  the 
Economic  Club  of  Boston,  February  23,  1916.  Printed  in  the  National 
Economic  League  Quarterly.  1:28-38.  May,  1916. 


ip8  SELECTED   ARTICLES 

lack  of  merit  it  may  have,  is  impracticable  for  the  American  peo- 
ple. The  discriminating  duty  policy  was  the  policy  of  the  fathers 
of  the  Republic.  When  it  went  into  effect  a  few  years,  we  were 
carrying  90  per  cent  of  our  imports  and  exports.  The  policy 
was  not  abandoned  in  1815.  It  was  not  abandoned  in  1828  or 
1830.  There  were  propositions  to  abandon  it  in  the  form  of 
reciprocity,  but  no  full  reciprocal  action  was  taken  by  other  na- 
tions at  that  time,  and  the  discriminating  duty  remained  in  force 
against  Great  Britain  until  the  year  1849. 

Under  that  policy  not  only  were  foreign  goods  admitted  in 
American  ships  at  10  per  cent  less  than  if  brought  in  foreign 
vessels,  but  there  was  a  discriminating  tonnage  duty  against 
foreign  ships,  and  there  was  in  the  China  trade  and  the  East 
India  trade  another  discrimination  in  the  rate  of  duty  on  tea, 
which  was  the  principal  article  of  import,  that  made  it  cost  5 
or  6  times  as  much  to  bring  tea  from  China  and  India  in 
foreign  vessels  as  in  American  vessels.  The  result  was  that  no 
tea  whatever  came  in  foreign  ships  from  the  East  Indies.  It 
was  under  the  discriminating  duty  policy  that  the  merchant 
princes  of  Salem  and  Boston  and  New  York  and  Philadelphia 
sent  their  great  fleets  to  the  East  Indies. 

It  was  there  that  the  foundation  was  laid  of  the  American 
clipper  trade.  The  men  who  manned  the  ships,  and  merchants 
who  owned  them,  were  then  more  heavily  subsidized,  more 
thoroughly  protected,  than  any  other  citizens  of  the  United 
States,  and  the  subsidy  given  to  American  ships  by  that  legisla- 
tion was  so  far  more  generous  than  any  subsidy  proposed  under 
Judge  Hardy's  or  any  other  plan  that  there  is  no  comparison 
between  them.  The  merchant  marine  was  once  a  protected  in- 
dustry. It  was  protected  for  a  great  many  years  by  discriminat- 
ing duties  and  tonnage  taxes,  and  the  duties  on  tea. 

I  would  like  to  have  Judge  Hardy's  attention  to  this  particu- 
lar consideration,  that  when  Great  Britain  began  to  give  subsi- 
dies, the  United  States,  in  a  few  years,  followed  her  example, 
and  the  subsidies  to  regular  lines  plying  to  Europe,  the  East 
Indies,  and  the  Pacific  Ocean  were  granted  by  a  Democratic 
Congress,  on  the  recommendation  of  President  Polk.  (Applause.) 
Moreover,  that  policy  succeeded.  We  started  a  dozen  years 
after  Great  Britain,  but  in  a  few  years,  under  these  Democratic 
subsidy  laws,  that  possibly  have  never  been  brought  to  Judge 
Hardy's  notice,  we  exceeded  Great  Britain  in  our  steamships 


AMERICAN    MERCHANT   MARINE  199 

on  the  Atlantic  Ocean,  to  the  West  Indies,  and  on  the  Pacific 
Ocean. 

We  not  only  excelled  Great  Britain  in  the  growth  in  our 
shipping,  but  we  surpassed  Great  Britain  in  the  excellence  of 
our  boilers  and  engines  and  the  design  of  our  hulls.  In  Eng- 
land, as  in  this  country,  the  men  who  turned  their  attention  to 
building  steamships,  were  the  very  men  who  had  been  building 
sailing  ships,  and  the  men  who  built  the  steam  engines  and  boil- 
ers in  the  United  States  were  just  as  proficient  as  those  in 
England. 

It  is  often  said  that  iron  ships  caught  us  at  a  disadvantage, 
that  we  did  not  know  how  to  build  them,  and  that  we  kept  on 
building  wooden  vessels.  Why,  we  built  iron  steamers  in  1842. 
The  steamer  Bangor,  built  of  iron  by  Harlan  &  Hollingsworth, 
at  Wilmington,  was  plying  between  ports  on  our  New  England 
coast  long  before  the  Civil  War.  Many  of  you  may  remember 
the  iron  shipyard  of  Harrison  Loring,  in  South  Boston.  He 
built  iron  ships.  I  recall  seeing  them  plying  in  the  coastwise 
trade.  Why  didn't  we  go  on  building  iron  steamships?  This 
is  the  reason:  Right  in  the  height  of  our  battle  with  Great 
Britain,  and  when  we  were  winning,  another  Democratic  Con- 
gress, influenced  by  different  motives,  took  away  subsidies,  and 
killed  the  American  steamship  industry. 

There  is  still  another  proposition  in  that  bill,  for  govern- 
ment ownership  and  operation  pure  and  simple.  I  do  not  believe 
in  that.  Our  Chamber  of  Commerce,  which  contains  many 
Democrats  as  well  as  Republicans,  does  not  believe  in  that.  It 
is  unnecessary,  because  there  are  no  merchant  vessels  afloat  that 
can  be  made  available  for  this  extraordinary  emergency  in  the 
world's  carrying  trade.  The  American  shipyards  are  full  of 
orders  too.  The  American  shipyards  have  contracts  that  will 
require  two  or  three  years  to  complete.  And  neither  the  gov- 
ernment of  the  United  States  nor  any  other  authority  in  exist- 
ence can  bring  into  existence  any  commercial  ships  before  that 
time. 

Here  in  New  England  government  ownership  is  equally  re- 
pugnant to  Republicans  and  to  Democrats.  I  found  that  out 
when  the  matter  was  brought  up  in  our  Chamber  of  Commerce, 
and  I  believe  it  is  the  largest  commercial  organization  of  the 
kind  in  the  United  States.  When  the  matter  was  brought  up 
before  the  directors  of  the  Boston  Chamber,  I  think  there  was 


200  SELECTED   ARTICLES 

no  dissent  to  denouncing  the  government  ownership  principle. 
They  say  the  government  ownership  plan  is  justified  because 
private  capital  has  done  nothing.  Private  capital  has  not  had 
a  chance  to  do  anything.  If,  instead  of  putting  the  government 
into  the  ocean  shipping  business,  suppose  you  proposed  to  put 
it  into  the  business  of  growing  cotton,  and  to  turn  half  of  the 
acreage  of  Judge  Hardy's  state  into  a  business  that  would  not 
have  to  earn  any  profit,  do  you  think  that  would  get  any  votes 
in  Texas?  (Applause.)  I  think  that  if  our  eloquent  friend  ran 
for  Congress  on  a  platform  of  government  ownership  and  opera- 
tion of  cotton  plantations  in  Texas,  a  Republican  could  win 
against  him. 

If  the  government  of  the  United  States  proposed  to  go  on  to 
Washington  street  and  start  a  department  store  alongside  of 
Jordon  Marsh's  or  R.  H.  White's,  what  do  you  think  they  would 
think  of  it?  If  the  government  of  the  United  States  came  into 
the  state  of  Massachusetts  and  undertook  to  operate  boot  and 
shoe  factories  without  any  profit,  what  would  the  communities 
and  citizens  employed  today  in  the  shoe  industry  think  of  it?  1 
do  not  believe  that  I  need  to  pursue  that  proposition  very  long, 
because  the  government  ownership  bill  is  the  most  grotesque, 
unfair,  and  iniquitous  ship  subsidy  bill  that  was  ever  proposed. 

We  have  had  a  great  deal  of  denunciation  of  subsidies.  Un- 
doubtedly you  can  have  a  bad  subsidy  bill.  If  you  had  a  bill 
that  gave  Bill  Jones  a  subsidy  and  did  not  give  Jack  Smith  a 
subsidy  for  the  same  class  of  ships,  you  would  think  it  was 
iniquitous,  and  so  it  would  be.  The  government  ownership  fea- 
ture authorizes  the  United  States  government  to  raise  through 
the  issue  of  Panama  Canal  bonds,  $50,000,000  to  build  ships,  and 
operate  them  in  the  foreign  trade  of  the  United  States,  and 
possibly  in  the  coastwise  trade.  But  let  us  deal  with  the  foreign 
trade  alone.  Those  ships  are  to  be  owned  by  the  government. 
They  are  to  be  operated  by  the  government.  Under  a  certain 
contingency  the  government  can  form  a  corporation  in  which  the 
government  can  hold  51  per  cent  of  the  stock.  These  ships 
are  to  be  operated  anywhere  on  the  ocean  where  the  Shipping 
Board  may  see  fit  to  send  them.  I  think  it  is  reasonable  to 
assume  that  any  intelligent  United  States  Shipping  Board  would 
not  establish  any  regular  lines  or  routes  where  any  regular 
American  steamships  were  running  now  under  the  mail  subsidy 
that  we  still  have  on  our  statute  books,  and  that  we  have  had 


AMERICAN   MERCHANT   MARINE  201 

there  for  a  great  many  years  without  any  Democrat  suspecting 
it. 

The  government  is  not  going  to  let  any  government-owned 
ship  go  into  bankruptcy.  It  is  not  going  to  have  any  govern- 
ment-owned ship  seized  by  its  creditors.  The  government- 
owned  ship  is  not  going  to  receive  any  subsidy  in  appearance, 
but,  at  the  end  of  the  year  every  obligation  of  that  government- 
owned  ship  is  going  to  be  paid  out  of  this  $50,000,000.  It  is 
going  to  be  called  an  appropriation,  but  it  is  just  as  much  of  a 
subsidy  as  any  grant  that  could  possibly  be  made  by  authority 
of  law. 

A  subsidy  has  been  sought  for  American  ships  for  this  rea- 
son— on  account  of  the  lower  rates  of  wages  of  the  foreign 
ships,  and  the  subsidies  that  certain  foreign  ships  receive.  Such 
a  subsidy,  except  on  a  few  mail  lines,  has  not  been  granted  to 
private  shipowners,  but  it  is  going  to  be  given,  by  this  bill,  to 
ships  altogether  owned  by  the  government,  or  to  the  ships  of 
this  corporation  of  which  the  government  is  51  per  cent  owner, 
and  some  gentlemen  over  in  Wall  Street  may  own  49  per  cent, 
and  draw  49  per  cent  of  the  dividends  that  may  accrue. 

Tramps  run  here,  there  and  everywhere,  all  over  the  world. 
Take  one  of  our  East  Boston  wharves.  There  may  be  lying 
at  that  wharf,  three  ships  loading,  say,  for  the  East  Indies. 
One  may  be  an  American  ship  privately  owned  by  the  Coastwise 
Transportation  Company,  or  somebody  else,  a  good  Boston 
house,  unsubsidized.  On  the  other  side  of  the  dock  lies  a  foreign 
ship  that  is  manned  at  one-half  of  the  American  wage  scale. 
At  the  end  of  the  dock  lies  a  government-owned  American  ship. 
They  are  all  loading  cargoes  for  the  same  destination.  At  the 
rates  of  freight  that  are  going  to  prevail  when  normal  condi- 
tions are  restored,  the  privately  owned  American  ship  is  going 
to  lose  money  on  that  voyage.  It  is  coming  back,  and  its  owners 
will  have  to  make  up,  out  of  their  savings,  what  they  have  lost 
by  that  transaction.  The  foreign-owned  ship  goes  on  her  voy- 
age with  her  low-wage  foreign  crew,  and  because  of  that,  and 
because  some  tramp  steamers  are  subsidized,  that  foreign  ship 
is  going  to  make  a  reasonable  profit  on  the  voyage.  The  gov- 
ernment-owned American  ship,  is  going  to  lose  just  as  much 
money  as  the  privately  owned  American  ship,  but  the  loss  will 
be  met  in  a  different  way. 

If  his  government-owned  ship  had  not  gone  into  the  trade, 


202  SELECTED   ARTICLES 

the  American  privately  owned  ship  would  have  to  compete  only 
with  the  foreign  ship,  with  its  cheap  wages,  but,  under  this  pro- 
posed law,  the  privately  owned  ship  has  to  compete  not  only 
with  the  foreign  ship,  but  with  a  ship  subsidized  against  it  by 
the  government  of  the  United  States.  Did  you  ever  read  in 
American  history  of  a  deal  like  that.  Put  the  two  on  an  even 
basis;  give  the  two  an  even  chance  against  the  foreign  ship. 
That  is  not  what  is  proposed  in  this  bill,  and  that  is  not  what 
is  going  to  be  accomplished. 


THE  AMERICAN  MERCHANT  MARINE1 

Various  schemes  for  rebuilding  our  foreign-trade  merchant 
fleet  have  from  time  to  time  been  suggested.  The  most  recent 
of  these  is  embodied  in  a  bill  popularly  known  as  the  Ship  Pur- 
chase Bill,  which  failed  in  the  Senate  through  the  opposition  of 
the  Republican  minority  and  the  defection  of  a  few  members 
of  the  Democratic  majority.  In  its  original  form  it  provided 
that  the  government,  through  a  shipping  board  composed  of 
the  Secretary  of  the  Treasury,  the  Postmaster  General,  and  the 
Secretary  of  Commerce,  should  subscribe  for  51  per  cent  of  the 
capital  stock  of  any  corporation,  now  or  hereafter  organized, 
for  the  purpose  of  purchasing  and  operating  merchant  vessels  to 
meet  the  requirements  of  the  commerce  of  the  United  States. 
The  initial  capital  stock  of  the  corporation  should  not  exceed 
ten  million  dollars  and  the  corporation  was  to  begin  business 
as  soon  as  the  51  per  cent  of  the  stock  was  subscribed  for  by 
the  United  States.  The  vessels  owned  by  the  corporation  should 
engage  only  in  the  foreign  trade.  The  bill  carried  an  appropria- 
tion of  ten  million  dollars  and  authorized  the  Secretary  of  the 
Treasury,  upon  request  of  the  shipping  board,  to  sell  Panama 
Canal  bonds  to  the  amount  of  $30,000,000  for  the  purpose  of  pur- 
chasing or  constructing  vessels  for  the  corporation. 

Now,  if  what  limited  experience  we  have  had  has  not  taught 
us  that  business  enterprises  cannot  be  operated  as  economically 
or  efficiently  under  government  as  under  private  ownership,  it 
should  yet  seem  plain  that  this  must  necessarily  be  so,  for  the 
chief  incentive  in  all  business  is  gain,  and  no  business  can  be 

1  By   John    H.   Thomas.     Century.     90:  200-7.     June,    1916. 


AMERICAN   MERCHANT   MARINE  203 

permanently  profitable  which  fails  to  serve  its  patrons  effectively 
or  is  heedless  of  the  need  of  economy.  With  a  government- 
owned  enterprise  no  such  incentive  exists,  and  no  need  of  econ- 
omy is  plainly  apparent.  It  is  not  the  business  of  government 
to  make  money,  and  while  government  officers  may  be,  and  gen- 
erally are,  quite  as  honest  as  the  officers  or  heads  of  private 
business  enterprises,  they  are  not  expected  to  earn  money,  and 
where  their  duties  involve  its  expenditure,  they  are  not  of 
necessity  concerned  over  the  fact  that  the  department  over  which 
they  preside  is  not  being  operated  at  a  profit,  since  appropria- 
tions may  be  confidently  looked  for  in  the  event  of  a  deficit. 
Their  incomes  are  fixed,  and  their  tenure  of  office  is  frequently 
uncertain;  hence  they  lack  the  spur  which  the  promise  of  in- 
creased income  as  a  reward  for  efficient  work  affords,  and  can- 
not count  upon  a  term  of  service  long  enough  to  make  worth 
while  a  complete  mastery  of  the  business. 

Almost  all  business  is  competitive  and  highly  specialized. 
None  is  more  so  than  that  having  to  do  with  shipping.  The 
great  business  enterprises  of  to-day  are  presided  over  by  men 
who  have  been  fitted  for  their  tasks  by  long  training  and  have 
reached  the  front  ranks  through  the  operation  of  the  relentless 
law  of  competition.  The  profits  resulting  from  the  operation  of 
any  large  competitive  business  are  at  times  great,  and  the  losses 
are  frequently  heavy.  This  is  perhaps  truer  of  shipping  than 
of  any  other  business,  for  the  competition  it  must  meet  is  as 
free  and  open  as  the  seas.  The  knowledge,  the  skill,  and  the 
foresight  necessary  for  the  management  of  a  fleet  over  a  series 
of  years  so  as  to  have  it  yield  the  investor  a  fair  return  on  his 
capital  can  be  acquired  only  through  a  long  and  hard  apprentice- 
ship. Those  who  have  successfully  served  this  apprenticeship 
are  well  paid  for  their  services,  and  deservedly  so.  They 
are  not  available  for  government-owned  enterprises,  with  no  re- 
wards to  offer  for  skilful  and  successful  management.  It  would 
be  difficult  to  imagine  private  capital  seeking  investment  in  a 
corporation  organized  under  an  act  of  Congress  such  as  this, 
which  reserves  to  the  government  control  of  the  business  through 
a  shipping  board  no  member  of  which  may  have  had,  or  is  in 
fact  likely  to  have  had,  any  knowledge  of  or  experience  with 
shipping.  It  would  be  equally  difficult  to  imagine  a  man  holding 
a  responsible  post  in  the  shipping  trade  assuming,  with  any  re- 
gard for  his  reputation,  the  management  of  such  a  corporation. 


204  SELECTED   ARTICLES 

It  would  be  an  utter  and  probably  a  scandalous  failure.  That  a 
Democratic  President  should  have  advocated  and  a  Democratic 
Congress  seriously  considered  such  a  measure  is  remarkable,  for 
it  is  wholly  foreign  to  all  theories  as  to  the  province  of  govern- 
ment for  which  the  party  has  heretofore  stood.  It  was  urged 
that  some  such  radical  departure  was  necessary  in  the  interests 
of  our  export  business;  that  on  the  outbreak  of  the  war  we 
suddenly  found  ourselves  so  short  of  transportation  facilities 
that  we  could  not  send  our  surplus  output  to  the  markets  that 
were  still  open.  Nothing  could  have  been  further  from  the 
truth.  The  great  merchant  fleet  of  England  is  navigating  the 
seas  unhindered  and  unafraid.  From  the  first  day  of  August  to 
the  present  time  its  ships  have  been  moored  at  every  American 
port  from  Boston  to  Galveston,  loading  cargoes  for  all  parts  of 
the  world. 

American  exporters  who  have  orders  from  abroad  may  find 
ships  loading  for  British,  Mediterranean,  South  African,  South 
American,  Australian,  and  far-Eastern  ports.  Freight-rates,  it 
is  true,  have  reached  an  abnormally  high  level,  and  shippers  who 
have  sought  to  supply  the  warring  nations  with  war  material 
have  at  times  found  difficulty  in  securing  room;  but  a  state  of 
war  always  makes  high  freight-rates  followed  by  a  sudden  col- 
lapse and  a  period  of  depression.  American  ships  are  to-day 
asking  a  very  high  premium  for  the  protection  that  our  neutral 
flag  affords.  To  those  familiar  with  the  operation  of  ships  there 
is  nothing  surprising  in  the  sudden  advance  in  freight-rates  at 
a  time  when  almost  the  whole  continent  of  Europe  is  in  arms. 
This  advance  is  not  due  wholly  or  even  in  great  part  to  a  short- 
age of  ships.  The  passenger-carriers  must  be  laid  up  or  run  as 
freighters.  A  steamer  built  for  the  passenger  trade  cannot  be 
run  for  freight  alone  except  at  very  high  rates.  War-risk  in- 
surance adds  enormously  to  the  voyage  cost.  Delays  incident 
to  the  congested  condition  of  ports  in  England,  France,  Italy, 
and  elsewhere,  to  the  shortage  of  labor,  and  to  arrest  and  search 
by  the  admiralty  authorities,  are  all  contributing  causes  to  the 
present  high  freight  market 


AMERICAN   MERCHANT   MARINE  205 

REPORT  OF  THE  SPECIAL  COMMITTEE  ON 
THE  MERCHANT  MARINE1 

Majority  Report 

Your  committee  are  of  the  opinion  that  government  owner- 
ship, combined  with  operation,  is  unwise,  and  advocates  its 
avoidance,  which  opinion  also  seems  to  be  the  general  verdict  of 
the  business  world.  Our  government  might  better  profit  by  the 
successful  experience  of  others,  and  not  establish  the  precedent 
of  even  temporary  experimental  competition  with  its  own  citizens. 
Government  operation  is  un-American,  is  likely  to  be  more 
extravagant  and  expensive  than  private  control,  and  will  seriously 
interfere  with  individual  initiative  and  retard  the  enterprise  of 
our  citizens. 

The  Alien  lines  now  operating  would  be  forced  into  competi- 
tion with  our  government,  or  joint  cooperation  would  have  to  be 
entered  into,  or  acquiesced  in,  if  uniformity  of  rates  was  estab- 
lished; an  action  which  might  lead  to  undesirable  complications. 
If  the  government  operated  vessels  of  considerable  speed,  and 
rate  competition  was  severe  the  lower  speed  steamers  of  the 
Alien  lines  would  make  money,  while  the  government  line  would 
lose  heavily. 

The  Alexander  Bill  also  states  "The  vessels  purchased  or  con- 
structed by  the  United  States  through  the  Shipping"  Board,  with 
the  approval  of  the  President  of  the  United  States,  shall  be  of  a 
type  as  far  as  the  commercial  requirements  of  the  foreign  trade 
of  the  United  States  may  permit,  suitable  for  use  as  naval 
auxiliaries  in  the  naval  establishment  of  the  United  States." 

Special  construction  is  expensive,  and  while  speed  is  desirable 
for  mail  carriers,  vessels  of  high  speed  cannot  compete  at  equal 
rates  with  yessels  of  low  speed.  We  must  have  the  proper  tools 
to  do  a  certain  class  of  work,  based  on  the  work  itself.  If  forced 
to  take  tools  unsuitable,  no  contractor  will  care  for  the  contract, 
and  so  it  would  be  with  passenger  and  freight  lines.  Men  of  ex- 
perience versed  in  shipping  matters  would  wish  to  secure  their 
own  steamers  adaptable  to  the  purpose  contemplated.  The  speed 
of  most  vessels  running  on  Alien  lines  to  China,  Japan,  India, 

1  Chamber  of  Commerce  of  the  United  States  of  America,  p.  3-9. 
May  8,  1915. 


206  SELECTED   ARTICLES 

Australia,  Africa,  New  Zealand  and  the  East  generally  does  not 
exceed  gl/2  to  iol/2  knots  on  the  average,  and  the  same  condition 
applies  to  the  South  American  lines,  with  the  exception  of  a  few 
vessels  of  a  higher  type  that  are  now  being  operated. 

Thirty  million  of  dollars,  a  large  amount  as  it  is,  would  only 
secure  a  small  number  of  steamers,  a  mere  bagatelle  in  compari- 
son with  immediate  national  requirements,  and  while  experiments 
are  being  tried  with  these  we  may  be  put  back  several  critical 
years  in  making  full  provision  for  our  necessities.  On  the  other 
hand,  if  the  vessels  are  contracted  for,  even  in  part,  it  may  mean 
serious  delay  in  establishing  contemplated  oversea  lines. 

The  great  problem  of  your  committee  is  to  determine  if  our 
desires  can  be  realized  in  a,  better  way  than  by  the  government 
program,  as  we  fully  appreciate  that  a  policy  should  not  be  dis- 
approved unless  such  disapproval  is  based  on  good  ground,  and 
also  accompanied  by  suggestions  and  feasible  plans  to  accom- 
plish better  and  more  economically  the  purposes  desired,  so  as  to 
appeal  to  public  sentiment  and  to  Congress. 

We  question  whether  the  American  people  are  so  strongly 
opposed  as  is  claimed  to  the  payment  of  reasonable  subventions, 
which  many  think  is  the  simplest,  and  probably  the  most  inexpen- 
sive, method  to  establish  mail  lines  to  South  America  and  else- 
where. Under  this  plan  no  responsibility  rests  with  the  govern- 
ment, contracts  are  made  and  bonds  are  given  to  faithfully  fulfill 
obligations  entered  into,  and  the  cost  is  defined  and  limited. 

As  an  alternate  proposition  the  existing  ocean  mail  act  can  be 
amended  to  provide  a  justifiable  and  fair  remuneration. 

The  present  ocean  mail  law  which  is  administered  by  the  Post 
Office  Department  places  the  speed  of  vessels  on  so  high  a  basis 
in  class  I,  namely  20  knots,  that  practically  no  lines  have  been 
able  to  conform  to  these  requirements,  as  the  cost  of  construction 
and  the  speed  demanded  make  the  operating  expense  of  such 
vessels  entirely  too  high.  We  would  suggest  that  the  speed  be 
reduced  to  16  knots  on  first-class  ships  and  on  second-class  ves- 
sels where  the  law  now  calls  for  16  knots,  that  the  speed  be 
reduced  to  12  knots,  adequate  compensation  being  allowed  to 
establish  lines  desired. 


AMERICAN   MERCHANT   MARINE  207 

REFERENDUM  NO.  9— MERCHANT  MARINE1 

At  the  third  annual  meeting  the  debate  upon  the  report  of  the 
Committee  on  Merchant  Marine  took  first  place  in  importance. 
It  was  finally  voted  that  the  points  at  issue  should  be  submitted 
to  the  entire  membership  by  referendum.  The  debate  had  cen- 
tered chiefly  on  the  Administration's  pending  ship  purchase  mea- 
sure but  as  less  than  a  month  would  elapse  between  the  annual 
meeting  and  the  final  adjournment  of  Congress  on  March  4, 
while  it  requires  forty-five  days  to  complete  a  referendum,  it 
was  obvious  that  no  result  could  be  obtained  in  time  to  influence 
the  course  of  pending  legislation.  The  board  therefore  decided 
to  broaden  the  scope  of  the  inquiry  and  ascertain  the  views  of 
members  upon  general  principles  of  ship  subsidy,  mail  subven- 
tion and  the  like  in  addition  to  the  specific  recommendations  of 
the  report.  Two  ballots  were  accordingly  submitted.  The  ref- 
erendum was  issued  on  May  8  as  Referendum  No.  9  and  the 
voting  closed  on  June  22.  Two  hundred  and  eighty-two  com- 
mercial organizations,  located  in  39  states,  the  District  of  Colum- 
bia, Alaska,  Hawaii,  the  Philippines,  Porto  Rico,  and  Paris, 
France,  took  part  in  the  voting.  The  result  was  a  severe  ar- 
raignment of  the  proposition  for  government  ownership  either 
with  government  or  private  operation  of  vessels  and  a  strong 
endorsement  of  the  principles  of  subsidy,  mail  subvention  and 
rate  regulation.  Only  one  recommendation,  No.  II  on  Ballot  2, 
failed  to  secure  the  two-thirds  vote  necessary  to  commit  the 
Chamber. 

Ballot  Number  One 

I.  Do  you  favor  the  government  undertaking  the  purchase, 
construction,  or  charter  of  vessels   for  mercantile  purposes,  to- 
gether with  the  operation  of  such  vessels? 

89  VOTES  IN  FAVOR;  690  VOTES  OPPOSED 

II.  Do  you  favor  ownership  of  merchant  vessels  by  the  gov- 
ernment but  with  operation  by  private  parties  under  leases? 

51  VOTES  IN  FAVOR;  713  VOTES  OPPOSED 

1  Nation's   Business.     4:   No.    2.   Pt.   2.  p.   g-io.     February,   1916. 


208  SELECTED   ARTICLES 

III.  Do  you  favor  subsidies  from  the  government  sufficient 
to  offset  the  difference  in  cost  between  operation  of  vessels  under 
the  American  flag  and  operation  in  the  same  deep-sea  trades 
under  foreign  flags? 

554  VOTES  IN  FAVOR  J  189  VOTES  OPPOSED 

IV.  Do  you  favor  subventions  from  the  government  to  estab- 
lish regular  mail  and  freight  lines  under  the  American  flag  to 
countries  in  which  the  commercial  interests  of  the  United  States 
are  important,  and  to  American  dependencies? 

713  VOTES  IN  FAVOR;  52  VOTES  OPPOSED 
Ballot  Number  Two 

I.  The  Committee  recommends  the  creation    of    a    federal 
shipping  board  to  investigate  and  report  to  Congress  regarding 
the  navigation  laws  and  to  have  full  jurisdiction,  under  the  law, 
in  all  matters  pertaining  to  over-sea  transportation. 

639  VOTES   IN  FAVOR  OF   THE  RECOMMENDATION;    Il6  VOTES   OPPOSED 

II.  The  Committee  recommends  that  the  government   sub- 
scribe to  the  entire  stock  of  a  marine  development  company  with 
a  capital  of  thirty  million  dollars,  this  company  to  have  authority 
for  seven  years  to  lend,  under  the  supervision  of  the  Federal 
Shipping  Board,  upon  the  security  of  first  mortgages  on  mer- 
chant vessels,  taking  as  evidence    of    their    indebtedness    bonds 
which  bear  a   fair  rate  of  interest  and  contain  provisions   for 
amortization,  the  development  company  to  guarantee  the  bonds  as 
to  principal  and  interest  and  sell  them  to  the  public. 

416  VOTES   IN    FAVOR  OF   THE   RECOMMENDATION;    314  VOTES   OPPOSED 

III.  The  Committee  recommends  that  the  ocean-mail  law  of 
1891  be  amended  by  lowering  the  speed  for  first-class  steamers 
from  twenty  to  sixteen  knots  and  for  second-class  steamers  from 
sixteen  to  twelve  knots,  and  by  making  the  compensation  ade- 
quate to  permit  the  establishment  of  lines  of  steamships  carrying 
both  mail  and  freight. 

692   VOTES    IN    FAVOR    OF   THE   RECOMMENDATION  ;    58   VOTES   OPPOSED 

IV.  The  Committee  recommends  that  there  should  be  legis- 
lation abolishing  deferred  rebates  and  providing  for  supervision 
of  rates  by  the  Federal  Shipping  Board,  with  requirements  for 


AMERICAN   MERCHANT   MARINE  209 

filing  with  the  Board  schedules  of  rates  and  all  agreements  among 
over-sea  lines. 

OOI    VOTES   IN   FAVOR  OF   THE  RECOMMENDATION;    130  VOTES   OPPOSED 

V.  The  Committee  recommends  that  federal  licenses  should 
be  taken  out  by  lines,  domestic  and  foreign,  engaged  in  ship- 
ping between  ports  of  the  United  States  and  other  countries. 

6lO  VOTES   IN  FAVOR  OF  THE  RECOMMENDATION;    I2O  VOTES   OPPOSED 

In  connection  with  this  recording  of  business  opinion  it  is 
interesting  to  note  the  altered  form  and  substance  of  the  Admin- 
istration shipping  bill  which  has  been  introduced  in  the  new  Con- 
gress in  the  past  few  days  and  which  has  received  the  careful 
study  of  the  Chamber's  Committee  on  Merchant  Marine. 


SHIPPING  BILL  WILL  ADD  NOTHING  TO  OUR 
TONNAGE1 

MR.  HADLEY.  Mr.  Chairman,  we  are  all  alike  solicitous  for 
the  development  and  expansion  of  our  mercantile  marine,  but 
notwithstanding  the  purpose  expressed  in  the  title  of  the  pending 
bill  under  existing  conditions,  if  enacted  into  law,  it  can  add 
nothing  to  the  total  of  our  tonnage. 

Our  domestic  shipyards  are  already  worked  to  the  limit  of 
their  capacity.  New  yards  are  in  course  of  equipment.  Private 
capital  is  seeking  investment  in  vessel  properties  beyond  all 
precedent.  If  the  government  seeks  to  buy  ships,  where  will  it  find 
them  for  sale?  The  minority  report  contains  the  statement  based 
upon  the  showing  at  the  hearings  that  "Great  Britain,  France, 
Germany,  Austria-Hungary,  Sweden,  Norway,  Brazil,  and  other 
maritime  nations  have  prohibited  the  transfer  of  any  of  their  ton- 
nage now  afloat  to  a  foreign  flag."  But  if  perchance  any  ships 
are  for  sale  the  diligence  of  the  private  investor,  in  the  present 
state  of  marine  activity,  will  seek  and  find  them.  If  the  govern- 
ment should  compete  it  would  only  be  to  further  stimulate  exist- 
ing fabulous  prices  and  to  render  them  altogether  prohibitive. 
The  bill  confers  authority  on  the  government  agency  it  would 

1  Speech  by  Lindley  H.  Hadley,  Representative  from  Washington,  in 
the  House,  May  16,  1916.  Congressional  Record.  53:9140-1  (current).  May 
16,  1916. 

16 


210  SELECTED   ARTICLES 

create  to  purchase  vessels  and  then  to  sell  or  lease  them.  What 
advantage  is  to  be  gained  by  the  government  acting  as  a  mere 
intermediary  or  middleman?  It  is  proposed  to  put  it  in  the  ship- 
brokerage  business.  It  can  not  buy  or  lease  on  a  more  favorable 
basis  than  the  private  citizen.  Why  should  the  latter  not  deal  in 
the  market  for  himself?  There  can  be  but  one  consideration  to 
induce  such  a  transaction  between  a  citizen  and  the  board,  and 
that  must  move  toward  the  citizen.  In  other  words,  the  board 
must  bargain  at  a  loss,  if  it  bargains  at  all.  Let  the  government 
build  vessels  and  the  result  will  be  the  same.  It  is  stated  that 
it  costs  approximately  $2,000,000  more  to  build  a  modern  dread- 
naught  in  a  government  yard  than  in  a  private  yard.  It  is  mani- 
fest that  in  the  event  of  construction  by  the  government  the  pri- 
vate investor  will  not  take  vessels  over  when  he  can  buy  others 
for  less  money,  except  on  equal  terms,  and  that  would  mean  gov- 
ernment loss.  The  logical  end  of  the  contemplated  transactions, 
whether  they  be  by  way  of  purchase,  lease,  or  construction  is  nec- 
essarily a  resort  to  the  provisions  of  the  eleventh  section  of  the 
bill,  the  organization  of  holding  companies  and  the  operation  of 
the  vessels. 

Irrespective  of  the  merits  of  that  course  as  a  matter  of  gov- 
ernmental policy,  it  should  be  considered  here  in  the  light  of 
probable  results.  The  end  sought  is  an  increase  of  tonnage.  The 
great  weight  of  opinion  expressed  at  the  hearings  by  those  best 
informed  on  the  subject  was  unqualifiedly  to  the  effect  that  the 
provision  for  government  ownership  and  operation  of  vessels 
would  cause  a  greater  loss  of  tonnage  from  private  sources  than 
the  gain  to  be  realized.  If  this  was  not  true,  the  little  that  will 
be  created  in  the  event  of  government  construction  can  in  no 
event  be  delivered  in  less  than  from  two  to  two  and  a  half  years. 
Supplementing  the  360  ships  now  building  in  American  yards,  the 
great  activity  of  private  capital,  if  it  is  not  intimidated  by  the 
enactment  of  this  bill  in  its  present  form,  will  meet  the  emergency 
in  the  meantime.  If,  on  the  contrary,  the  plans  proposed  in  this 
bill  are  put  into  execution  no  one  can  say  how  much  of  the 
tonnage  now  under  construction  will  fail  to  come  under  American 
registry  and  how  much  will  seek  registry  and  trade  beyond  the 
jurisdiction  of  government  competition  or  government  restrictions. 
Government  ownership  and  operation  of  an  entire  merchant 
marine  is  a  very  different  thing  from  the  ownership  and  opera- 


AMERICAN   MERCHANT   MARINE  211 

tion  of  a  small  percentage  only  in  competition  with  that  privately 
owned.  The  latter  is  the  case  presented  here. 

No  showing  has  been  made  to  demonstrate  wherein  the  in- 
vestment contemplated  will  give  better  or  earlier  results  than  the 
investment  of  private  capital  will  yield.  We  are  not  informed 
where  lines  will  be  established,  what  ports  are  to  be  directly 
favored,  nor  what  existing  lines,  if  any,  are  to  be  subjected  to 
competition.  If  new  fields  of  operation  are  to  be  opened,  it  does 
not  appear  upon  what  theory  we  are  to  anticipate  profitable  opera- 
tion where  the  ingenuity  of  private  enterprise  has  declined  to 
venture.  All  we  know  is  that  we  are  asked  to  join  blindly  in 
staking  $50,000,000  of  public  money  upon  an  enterprise  which  no 
other  great  maritime  nation  has  voluntarily  undertaken,  sur- 
rounded by  the  conditions,  and  facing  the  probabilities  stated.  In 
the  domain  of  private  enterprise  such  a  course  would  meet  with 
universal  condemnation.  It  has  no  claim  to  support  at  our  hands 
except  such  as  business  expediency  may  justify. 

The  bill  contemplates  the  construction  and  equipment  of  the 
vessels  in  question  in  the  cheapest  market.  By  its  express  terms 
preference  is  to  be  given  to  domestic  yards  only  in  the  event  of 
"other  things  being  equal."  The  advantage  of  spending  the 
money  at  home,  and  the  endless  chain  of  circulation  as  a  result, 
in  the  benefits  of  which  our  people  would  participate,  is  wholly 
disregarded.  We  would,  indeed,  present  a  remarkable  spectacle 
before  the  world  if  we  should  provide  for  the  government  to  take 
$50,000,000  of  the  money  of  the  American  people  and  expend  it  in 
foreign  lands  for  what  they  themselves  produce,  and  at  the 
expense  of  their  own  labor.  I  stand  for  the  building  of  American 
ships  in  American  yards  of  American  materials  and  with  Ameri- 
can labor.  I  am  opposed  to  expending  public  funds  for  that  pur- 
pose beyond  the  jurisdiction  of  the  United  States. 


THE  AMERICAN  MERCHANT  MARINE1 

This  brings  me  to  the  question  of  the  Government  Shipping 
Bill.  This  legislation  was  originally  advocated  solely  because  of 

1  Address  by  John  W.  Weeks,  United  States  Senator  from  Massachu- 
setts, at  the  dinner  of  the  Academy  of  Political  Science,  November  12, 
1915.  Printed  in  the  Proceedings.  6:  28-47.  October,  1915. 


212  SELECTED   ARTICLES 

the  emergency  which  developed  at  the  breaking  out  of  the  Euro- 
pean war.  If,  however,  that  were  the  only  reason  for  it  there 
would  be  no  necessity  for  taking  it  up  again,  because  although 
our  trade  this  year  bids  fair  to  be  half  a  billion  dollars  greater 
than  ever  before,  there  does  not  seem  to  be  any  serious  complaint 
of  insufficient  shipping  to  carry  it ;  but  there  were  other  reasons 
for  not  passing  this  legislation  which  were  sufficient  even  if  an 
emergency  did  or  did  not  exist.  To  have  obtained  ships  that 
were  not  employed,  it  would  have  been  necessary  to  have  pur- 
chased those  belonging  to  .a  belligerent,  and  with  this  possibility 
in  view  our  government  was  at  once  notified  by  the  representa- 
tives of  the  belligerent  nations  that  the  purchase  of  ships  of  that 
character  under  such  circumstances  would  not  void  their  right  to 
seize  and  condemn  them.  Therefore,  if  we  had  purchased  the 
German  interned  ships,  which  were  the  only  ones  available,  and 
as  I  think  was  originally  intended,  the  action  would  have  been 
tantamount  to  buying  a  quarrel. 

If  belligerent  ships  had  not  been  purchased,  nothing  whatever 
would  have  been  gained  in  the  emergency  which  was  supposed  to 
exist,  because  all  American  and  neutral  tonnage  was  engaged  to 
its  utmost  capacity  and  earning  larger  returns  than  ever  before. 
Therefore,  the  prices  which  it  would  have  been  necessary  to  pay 
would  necessarily  have  been  excessive,  and  a  corresponding  loss 
would  have  been  incurred  when  the  government  wished  to  dis- 
pose of  the  vessels  or  in  any  way  to  get  out  of  the  transportation 
business.  Not  a  ton  of  additional  shipping  would  have  been  put 
into  operation  as  a  result  of  the  passage  of  such  a  bill ;  it  would 
simply  have  meant  the  transfer  of  ships  operated  by  private  in- 
dividuals to  government  operation  which,  if  we  may  judge  by 
the  results  of  government  operation  in  other  ways  and  in  other 
places,  would  have  lessened  rather  than  increased  the  efficiency 
of  the  ships  transferred. 

Moreover,  and  more  serious  than  any  and  all  of  these  reasons 
was  the  one  which  should  have  been  sufficient  to  condemn  the 
whole  project,  and  that  was  the  attempt  to  put  the  government 
permanently  into  transportation  business  of  any  kind,  in  the 
operation  of  which  it  was  confessed  material  losses  would  have 
been  made.  A  careful  study  of  government  land  transportation 
in  those  countries  where  there  are  state-owned  and  operated  rail- 
roads demonstrates  conclusively  that  the  government  is  a  much 
less  effective  agency  for  such  purposes  than  private  corporations. 


AMERICAN   MERCHANT   MARINE  213 

This  would  be  particularly  true  in  a  government  like  ours  where 
political  conditions  and  changes  would  at  once  become  an  im- 
portant factor  in  the  results  and  would  certainly  prevent  satisfac- 
tory financial  returns.  This  cannot  be  better  illustrated  than  in 
the  case  of  the  rural  delivery  service  conducted  by  the  Post  Office 
Department.  The  Postmaster  General  last  year  reported  to  Con- 
gress that  if  he  were  allowed  to  reorganize  the  service  he  could 
save  more  than  eighteen  millions  of  dollars,  but  no  step  was 
taken  to  bring  about  this  result  because  of  political  pressure 
which  was  brought  against  it,  and  that  general  result  would 
develop  in  any  similar  attempt  to  conduct  governmental  opera- 
tions. 

It  is  evidently  the  purpose  of  the  present  administration  to 
enlarge  rather  than  limit  governmental  activities  in  connection 
with  business  affairs.  The  President  in  his  address  delivered  to 
Congress  on  December  8,  1914,  used  this  expression  in  referring 
to  economical  administration:  "But  my  point  is  that  the  people 
of  the  United  States  do  not  wish  to  curtail  the  activities  of  this 
government ;  they  wish  rather  to  enlarge  them."  I  am  opposed  to 
this  tendency,  and  would  as  far  as  possible  take  directly  the 
contrary  course.  Governments  are  not  organized  for  the  purpose 
of  conducting  business ;  they  cannot  produce,  and  never  have  pro- 
duced, economical  results  in  any  business  activity,  and  therefore 
I  greatly  regret  the  publicly-announced  intent  of  the  administra- 
tion to  revive  the  government  shipping  legislation  which  was  con- 
sidered and  defeated  last  winter;  for  this  will  be  done,  even 
though  chambers  of  commerce  and  other  commercial  organiza- 
tions very  largely  having  no  interest  in  the  shipping  business 
have  reported  almost  unanimously  against  such  a  course  being 
undertaken. 

In  1867  the  Argentine  government  made  a  proposition  to  the 
United  States  to  subsidize  jointly  a  direct  line  of  steamers,  and 
I  am  credibly  informed  that  the  important  South  American 
countries  would  be  willing  now  to  join  in  such  an  undertaking. 
The,  only  purpose  now  advocated  in  reviving  the  administration 
project  is  to  establish  lines  to  South  America,  and  the  business- 
like way  to  do  so  is  to  join  with  these  South  American  coun- 
tries in  some  means  of  encouragement  similar  to  those  followed 
in  all  other  like  instances.  If  in  1867  we  had  had  wisdom  enough 
to  accept  the  proposition  made  by  Argentina,  a  very  considerable 
part  of  the  foreign  commerce  of  South  America  which  now  goes 


2i4  SELECTED  ARTICLES 

to  Europe  would  undoubtedly  have  been  diverted  to  us.  In  any 
case,  it  should  not  be  possible  that  further  attempt  will  be  made 
to  carry  out  the  purposes  of  last  year's  shipping  bill  when  it  has 
been  condemned  by  practically  every  competent  individual  wit- 
ness as  well  as  by  the  great  business  interests  of  the  United 
States. 


DEVELOPMENT  OF  THE  AMERICAN 
MERCHANT  MARINE1 

But,  as  though  the  Seamen's  Law  were  not  enough,  merchant 
ship-owners  are  menaced  by  government  ownership  and  opera- 
tion. Merchants  are  told  that  as  they  do  not  buy  or  build  more 
ships  under  present  conditions,  the  government  will  step  in  and 
expend  a  large  amount  in  building  or  purchase.  As  is  well 
known,  all  the  shipyards  in  the  United  States  are  full  of  orders, 
and  cannot  take  on  more  for  delivery  in  less  than  eighteen 
months  or  two  years.  Foreign  shipping  is  selling  at  almost 
double  the  prices  of  a  year  ago  and  foreign  governments  are 
very  reluctant  to  allow  any  of  their  tonnage  to  pass  from  their 
control.  If  the  government  should  buy  foreign  steamers,  it 
would  not  add  anything  to  the  carrying  capacity  of  the  world, 
for  it  would  be  merely  a  transfer  from  one  flag  to  another. 

Is  anyone  ready  to  affirm  that  the  government  can  operate 
steamships  as  economically  as  private  merchants  or  corporations? 
But  apparently  that  is  no  obstacle  in  the  way  of  government 
ownership  at  high  cost  and  operation  under  labor-union  condi- 
tions. In  a  recent  address  in  San  Francisco,  the  Secretary  of  the 
Treasury  plainly  stated  that  we  must  have  American  tonnage  on 
the  Pacific  Ocean  no  matter  what  it  costs ;  that  if  private  inter- 
ests would  not  provide  it,  the  government  would ;  and  if  in  com- 
petition with  foreign  tonnage  under  cheaper  conditions  the  gov- 
ernment ships  should  lose  money,  the  losses  should  be  charged 
to  the  government  and  paid  for  by  the  people.  Was  there  ever 
a  more  flagrant  illustration  of  paternalism  run  wild?  And  how 

1  Read  by  Welding  Ring,  Chairman,  Committee  on  Foreign  Commerce 
and  the  Revenue  Laws,  New  York  Chamber  of  Commerce,  at  the  meeting 
of  the  Academy  of  Political  Science,  November  12,  1915.  Printed  in  the 
Proceedings.  6:  65-73.  October,  1915. 


AMERICAN   MERCHANT   MARINE  215 

can  it  be  expected  that  private  interests  will  continue  in  or  enter 
the  field  against  such  competition?  Is  it  not  more  than  probable 
that  American  shipowners  will  again  seek  the  protection  of  for- 
eign flags,  where  conditions  are  less  onerous  and  more  profit- 
able? A  bill  providing  for  government  ownership  passed  the 
lower  house  of  Congress  at  the  last  session  and  only  failed  of 
passage  in  the  Senate  after  a  long  struggle.  Already  those  in 
authority  at  Washington  state  that  a  new  bill  will  be  introduced 
when  Congress  opens,  and  pressed  by  government  influence.  It 
behooves  every  one  who  desires  to  see  an  American  merchant 
marine  to  be  up  in  arms  and  use  every  legitimate  means  to  com- 
pass its  defeat. 

Are  there  any  means  or  methods  by  which  our  shipping  can 
be  restored  and  our  flag  become  known  again  throughout  the 
world?  There  are  many  who  believe  it  is  possible,  and  the 
following  are  some  details  as  to  what  is  necessary: 

First,  the  creation  of  a  shipping  board  patterned  largely 
after  the  British  Board  of  Trade,  which  has  aided  so  materially 
in  building  up  British  shipping.  This  board  should  be  com- 
posed of  men  familiar  with  all  shipping  questions,  of  broad 
knowledge  and  actual  experience,  and  they  should  be  free  from 
the  restrictions  of  governmental  interference,  except  so  far  as 
the  laws  of  safety  in  construction  and  operation  require.  They 
should  have  the  power  to  revise  and  reconstruct  our  navigation 
laws,  making  them  more  nearly  conform  to  those  of  successful 
ship-owning  nations,  removing  many  restrictions,  and,  while 
making  them  cover  every  detail  of  safety,  broadening  and 
liberalizing  their  scope  so  that  they  will  be  less  onerous,  and 
will  give  greater  freedom  to  owners.  It  is  not  wise  to  avail 
ourselves  of  the  successful  experience  of  others,  rather  than 
adhere  to  our  own  faulty  and  unsatisfactory  law? 

Second,  a  prompt  suspension  of  the  Seamens'  Law,  or,  better 
still,  its  repeal,  and  if  necessary  the  enactment  of  a  new  law 
avoiding  the  mistakes  of  the  present  one.  It  must  be  admitted 
that  as  the  law  now  stands,  it  has  already  forced  a  very  con- 
siderable volume  of  tonnage  out  of  the  trades  that  have  been 
fostered,  cultivated  and  developed  for  many  years.  Those  who 
proposed  and  pressed  it  through  Congress  are  the  first  to  suffer, 
and  our  American  seamen  are  feeling  its  ill  effects  in  the 
lessened  opportunities  for  employment.  If  Congress  cannot  be 


216  SELECTED   ARTICLES 

induced  to  repeal  the  law,  then  it  should  pass  supplemental 
legislation,  eliminating  its  unfavorable  features  and  making  it 
satisfactory  and  helpful  to  all  interests. 

Third,  the  menace  of  government  ownership  should  cease 
and  this  dark  cloud  of  government  competition  be  driven  from 
the  horizon.  What  merchant  or  capitalist  would  be  willing  to 
invest  in  ships  when  he  felt  that  any  day  the  government  would 
become  his  competitor  and  carry  on  the  trade  irrespective  of 
whether  it  was  profitable  or  not?  The  merchant  would  have  to 
bear  his  own  losses,  while  the  government  would  charge  them 
to  profit  and  loss  and  the  people  would  pay  them.  Is  that  a 
competition  that  is  fair  or  desirable? 

Fourth,  proper  legislation  should  be  enacted  so  that  advances 
made  by  bankers  and  banks  shall  be  an  absolute  lien  on  the  ship, 
with  no  possibility  of  anything  preceding  such  lien.  England 
has  well-defined  and  settled  laws,  operating  so  successfully  that 
their  banks  consider  loans  on  shipping  as  a  most  desirable  form 
of  investment,  and  it  has  been  a  wonderful  aid  in  building  up 
their  merchant  marine.  As  the  United  States  is  now  leading  the 
rest  of  the  world  as  a  center  of  capital,  why  should  not  a  fair 
portion  of  our  surplus  go  into  the  building  up  of  our  shipping? 
And  it  will  if  our  laws  will  make  such  investments  safe. 

These  are  some  of  the  fundamental  conditions  that  must  be 
met  before  we  can  hope  to  see  any  large  development  in  our 
shipping  industries.  There  will  be  other  obstacles  to  overcome, 
principally  the  higher  cost  of  labor  and  material  in  the  building 
of  ships  in  the  United  States,  the  higher  wages  that  must  be 
paid  to  officer  and  man  our  ships,  and  a  more  liberal  scale  of 
living;  but  all  of  these  will  be  overcome  if  our  laws  are  made 
more  liberal,  unfair  restrictions  are  removed,  the  menace  of  gov- 
ernment ownership  is  withdrawn,  and  greater  inducements  are 
offered  for  the  investment  of  capital. 

There  is  one  subject  that  requires,  and  will  no  doubt  receive, 
exceptional  study  and  consideration  by  our  people  and  Congress 
in  the  rehabilitation  of  our  merchant  marine,  and  it  is  a  subject 
on  which  there  are  great  diversities  of  opinion.  Subsidies  to 
many  appear  to  be  the  only  hope  of  regaining  our  lost  shipping, 
while  to  many  others  they  are  the  most  unwise  kind  of  assistance. 
Advocates  claim  that  our  shipbuilders  and  shipowners  must  have 
subsidies  or  subventions  (the  difference  between  the  two  being 


AMERICAN    MERCHANT   MARINE  217 

hardly  appreciable)  in  order  to  meet  the  increased  cost  of  con- 
struction and  expense  of  operation.  They  point  to  what  other 
nations  have  done  and  are  doing  in  the  way  of  such  assistance, 
and  claim  that  the  United  States  must  do  as  much  or  more.  They 
demand  larger  appropriations  for  our  ocean  mail  service,  and 
ask  that  with  government  assistance  lines  should  be  established 
and  operated  to  many  countries,  even  if  in  the  operation  losses 
should  be  sustained.  This  they  do  on  the  ground  that  "trade 
follows  the  flag,"  a  statement  that  was  true  many  years  ago, 
when  our  shipowners  were  merchants  also,  selling  their  goods 
wherever  they  sent  their  ships.  Today  these  conditions  are  en- 
tirely changed  and  trade  follows  the  cheapest  and  most  reliable 
transportation  routes  and  the  best  facilities  for  financing,  irre- 
spective of  the  flag. 

Those  opposed  to  subsidies  point  to  the  fact  that  most  of  the 
countries  granting  such  assistance  do  so  principally  to  aid  the 
mail  service  and  not  for  the  transportation  of  freight.  Eng- 
land, with  her  vast  fleet  of  freight  liners  and  tramp  steamships, 
pays  only  for  carrying  of  the  mails,  and  for  special  equipment 
and  preparations  for  war  purposes  by  the  government.  Ger- 
many pays  also  for  mail  services  and  affords  but  little  assistance 
to  cargo-carriers.  In  fact,  the  Hamburg-American  Packet  Com- 
pany, the  largest  steamship  company  in  the  world,  has  never  ac- 
cepted assistance  of  any  kind.  France  pays  the  largest  subsidies, 
and  her  progress  in  ship-owning  has  been  the  slowest  of  any  of 
the  large  maritime  nations.  Japan  is  the  only  instance  where 
government  assistance  has  materially  helped  in  the  development 
of  a  large  merchant  marine. 

As  between  the  pros  and  cons  of  this  much-debated  subject, 
there  should  be  some  medium  by  which  our  ship-building  and 
ship-owning  industries  may  be  stimulated  and  yet  not  cast  upon 
the  government  the  burden  of  supporting  unprofitable  enterprises. 

Sir  Walter  Raleigh  said  that  the  nation  which  controlled  the 
shipping  of  the  world  controlled  the  trade  of  the  world,  and 
so  the  world  itself.  This  may  not  be  quite  so  true  today,  but 
it  is  true  to  a  very  large  degree,  and  with  the  end  of  the 
present  war  the  nation  that  has  the  largest  volume  of  shipping 
wil>  secure  the  greatest  share  of  foreign  trade. 

Is  it  not  wise  for  this  country  to  be  up  and  doing,  and 
making  preparations  for  the  trade  contest  that  is  sure  to  come? 


2i8  AMERICAN   MERCHANT   MARINE 

May  we  not  hope  that  our  legislators  at  Washington  will  awaken 
to  the  desirability  and  necessity  of  wise  and  proper  legislation 
that  will  instil  into  our  shipowners,  merchants  and  bankers  such 
trust  and  confidence  that  they  will  all  work  together  in  united 
efforts  to  place  the  United  States  again  in  the  van  of  ship- 
owning  countries,  sending  our  flag  into  all  ports  of  the  world, 
and  giving  us  a  mercantile  marine,  the  pride  of  all  our  people. 


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